THE 

ARTHUR  YOUNG 

ACCOUNTING 

COLLECTION 


Graduate  School  of 
Business  Administration 

Library  of  the 

University  of  California 

Los  Angeles 


ow. 


UNivERsrr  o^m, 

LOS   A[\ 


Library 

Gfraduate  School  of  Bw- '      --^p.  ^ministration 

Vii'i    '"^rr  ■■ '    -  '  ■'  f;'   rnia 

IfOS  Angeles  24,   California 


DEPARTMENT  STORE  STATISTICS 


DEPARTMENT  STORE  STATISTICS 

WITH  THE  AID  OF  THE 

SLIDE  RULE 


By 

ROBERT  B.  SCHREFFLER 

DEPARTMENT  STORE  EFFICIENCY 
ENGINEER 


Published  "By 

ROBERT  B.  SCHREFFLER 

215  S.  Market  Street 

Chicago,  111. 


Copyright  1914 
Robert  B.  Schreffler 


THE  DUBOIS  PRESS W  ROCHESTER,  N.  Y. 


Bm.  Admin. 
Libra rv 


TO 
MY  SON 
ROBERT 


PREFACE 

IN  offering  this  volume  to  Department  Store  Accountants, 
and  Accountants  in  general,  I  feel  that    it    will,    in    a 

measure,  supply  a  long  felt  want.  The  growth  of  compe- 
tition during  the  last  decade,  requires  that  Retail  Business,  to 
be  successful,  must  be  transacted  on  a  more  scientific  basis,  and 
that  the  General  Manager  and  other  executives,  be  presented 
with  the  facts  in  a  concise  and  understandable  form  while  they 
will  do  the  most  good,  and  before  they  become  ancient  history. 

In  preparing  these  chapters,  I  have  had  in  mind  two 
things : 

1.  The  presentation  of  highly  satisfactory  speci- 
mens of  reports  which  are  in  actual  use  by  some 
of  the  most  successful  stores,  with  full  explana- 
tions concerning  the  preparation  of  them. 

2.  To  describe  an  instrument  which  I  have  used  to 
great  advantage,  in  preparing  such  reports  for  a 
number  of  years,  to  perform  all  calculations 
involving  the  principles  of  multiplication  and 
division,  and  one  which  I  have  successfully 
taught  to  my  clients  in  various  stores, — the  Slide 
Rule. 

In  order  that  the  reader  might  get  a  clear  understanding 
of  the  use  of  the  Slide  Rule  for  performing  the  calculations 
described,  the  first  chapters  have  been  devoted  to  General 
Instructions  for  the  use  of  it,  together  with  a  number  of 
problems  for  practice.  The  Scales,  C  and  D,  which  will  be 
found  in  the  pocket  at  the  back  of  the  book  are  to  be  used  by 
the  reader  to  practice  the  examples  illustrated.  The  Scales 
are  perfect  and  with  them  any  of  the  problems  may  be  solved. 


8  PREFACE 

and  although  not  quite  so  easily  handled,  all  calculations  may 
be  performed  as  accurately  with  them  as  with  a  regular  rule. 

Formulae  are  shown  for  working  out  all  the  calculations 
required  by  the  forms  illustrated.  These  are,  by  no  means, 
exhaustive,  but  are  submitted  as  a  basis  upon  which  the  reader 
may  build  as  occasion  demands. 

The  book  is  not  intended  to  be  a  work  on  "  bookkeeping  " 
and  as  it  being  presupposed  that  a  satisfactory  method  of  keep- 
ing the  original  records  is  in  force,  all  particulars  relating  to 
same  have  been  omitted  with  the  exception  of  the  description 
of  a  simple  and  satisfactory  method  of  recording  Purchase 
Orders  in  the  office  and  an  outline  of  a  highly  approved 
method  of  handling  the  Freight  Account.  While  these  two 
do  not  deal,  primarily,  with  Department  Store  Statistics,  I 
feel  that  the  book  would  not  be  complete,  or  nearly  so  helpful, 
without  these  chapters. 


Om^^^^U-    /S     So^i^^s^ffSL^-^ 


CONTENTS 


CHAPTER  I. 

Introduction   15 

General    Uses   of   Slide  Rule   in   Preparing  Department   Store   Statistics. 

CHAPTER  II. 

Description  of  Slide  Rule  and  General  Instructions  for  Operating 19 

Logarithms  and  Logarithmic  Scales  Defined  and  Described — Primary, 
Secondary  and  Tertiary  Divisions  Explained — Instructions  for  Reading 
Values  on  the  Rule — Multiplication,  Division  and  Proportion  Illustrated 
by  Formulae  and  Drawings. 

CHAPTER  III. 

The  Decimal  Point 33 

Characteristics — Illustrations — Decimal  Indicator. 

CHAPTER  IV. 

Problems   for  Practice 37 

These  Problems  Involve  Principles  Encountered  Daily  in  Preparing 
Department  Store  Statistics. 

CHAPTER  V. 

Pay  Roll  Statistics 39 

Importance — Necessity  for  Frequent  Checking — Census  Reports — Indi- 
vidual Clerks'  Records — Making  Calculations  on  Basis  of  Salary  Earned 
Instead  of  Salary  Paid. 

CHAPTER  VL 

Calculating  Mark-Up  and  Percent  of  Mark-Up 59 

Danger  of  Excessive  Mark-Up — Determining  Selling  Prices — Purchase 
Records — Purchase  Reports — Merchandise  Stock  Ledger. 

CHAPTER  VII. 

Taking  the  Inventory 73 

Right  and  Wrong  Methods — Subdivision  of  Stock — Form  of  Sheet — 
Measuring  and  Counting — Preparing  the  Sheets — Listing — Goods  Sold 
While  Listing — Extending — Recapitulations. 


10  CONTENTS 

CHAPTER  VIII. 

Merchandising  Statistics    (preliminary) 83 

Expense  the  Proper  Basis — Preliminary  Plans — Determining  the  Amount 
of  Stock  to  Carry — Turnover  Calculations — Purchases  Allowed — Making 
Monthly  Proportions. 

CHAPTER  IX. 

Merchandising  Statistics   (weekly  reports) 99 

Reports  For  the  General  Manager — For  the  Buyers — Use  of  Reports  to 
Speed  Up  Sales — Sales  Comparisons — Purchase  Reports  Showing  Amount 
Bought  and  Balance  of  Allotment — Weekly  Turnover  Comparison — Buy- 
ers' Weekly  Statements. 

CHAPTER  X. 

Distributing  Expenses   115 

Salary — Freight  and  Express — Advertising — Rent — Window  Display — 
Insurance  and  Taxes — Department  Expense — General  Expense. 

CHAPTER  XI. 

Purchase  Order  Record 131 

Writing  Purchase  Orders — A  Separate  Book  for  Each  Department — Use 
of  Each  Copy — Office  Record — Distribution  According  to  Date  of 
Delivery — Cancellations — Weekly  Report — When  Date  of  Shipment  is 
Changed. 

CHAPTER  XII. 

Freight  Account  139 

Not  an  Expense  Account — An  Unexpired  Charge — Instructions  for  Inau- 
gurating a  Proper  Accounting. 


LIST  OF  ILLUSTRATIONS 


ILLUSTRATION 

NO.  PAGE 

1.  A   Logarithmic    Scale — Gunter's    Rule 21 

2.  Scales  C  and  D—Oughtred's  Rule 23 

3.  Diagram  of  Scales   and   Indexes 24 

4.  Slide  Rule   Complete  with  Runner 25 

5.  Multiplication    Illustrated 28 

6.  Division    Illustrated 30 

7.  Proportion  Illustrated — 2   Settings 30A 

8.  Decimal    Indicator 36 

9A.  Weekly     Census     Report — Sales-help — Shoiving     a     comparison     of    Sales, 

Salaries,   number   of  Employees   in   each  department,   and   relative  per- 
centages ivit/i  preceding  year 43 

9B.    Weekly  Census  Report — Dead-help — Shoin-ing  comparison  of  Salaries,  num- 
ber of  Employees  and  percent  of  Sales  iviih  preceding  year 44 

10.  Annual  Comparison  of  Sales  and  Salaries,  luith  percent 47 

11.  Weekly  Clerks'   Sales  Report — Shoiuing  a  comparison  of  the  sales  of  each 

clerk  in  a  department  ivith  percent  and  standing 48 

12.  Clerk's    Individual    Sales    and    Salary    Record — Weekly    Basis — Showing    a 

Clerk's   Sales,   percent,    and   standing    in   department   both   weekly    and 
cumulative  for  a  six  month  period 50 

13.  Monthly  Clerk's  Sales  Report — Showing  a  comparison  of  the  Sales  of  each 

clerk  in  a  department  for  a  month  ivith  percent  and  standing 52 

14.  Clerk's  Individual  Sales  and  Salary  Record.     Monthly  Basis — Showing  Sales, 

percent,  and  standing  in  department  both  monthly  and  cumulative  for 
one   year    53 

15.  16,  17,  18.     Four  positions   of  Rule   set  for  calculating  percent  of   a  clerk's 

salary  to  the  corresponding  month's  Sales  on  an  exact  basis 54A 

19.  Monthly  Distribution   of   Department   Salary — On   basis    of  amount   earned 

instead   of   amount  paid 56 

20.  Checked  Invoice — Showing  how  the  retail  price  and  extensions  and  the  per- 

cent  of  Mark-Up   are   recorded 60 

21.  Comparison  of  Percent  of  Profit  Based  on  Cost  with  Same  Based  on  Retail.  .       62 

22.  Purchase    Report    Showing    Percent    of    Mark-Up    Maintained.     Compared 

with    Standard    Set 64 

23.  Columnar    Purchase    Record 66 

24.  Purchase  Record — Unit   System 68-69 


12  LIST  OF  ILLUSTRATIONS 

ILLUSTRATION 

NO.  PAGE 

25.  Merchandise    Stock    Ledger 70 

26.  Inventory  Sheet  for  Taking  Stock  at  Cost  and  Selling — Shoiu'tng  method  of 

entering  and  extending  prices  and  reductions 76 

27.  Department    Inventory   Recapitulation 79 

28.  Store's    Inventory    Recapitulation 81 

29.  Six  Months'  Preliminary  Merchandising  Plans 84 

30.  Six  Months'   Preliminary   Sales   Plans 86 

31.  Six  Months'  Preliminary  Stock  Plans 88 

32.  Six  Months'  Preliminary  Expense  Plans 91 

33.  Advance   Sales   Summary   for   Merchandising   Executives 100 

34.  Advance  Sales  Statement  for  Buyers 101 

35.  Buyers'   Daily   Sales   Report 102 

36.  Daily  Sales  Comparison — All  Departments 104 

37.  Weekly    Sales    and   Reduction    Comparison — for    the   current    week,    month, 

and  season   104A 

38.  Weekly  Purchase  Report — S/iozving  season's  allotment,  goods  received,  un- 

filled orders,  and  remaining  purchasing  poiver  for  each  department. ..  .  106 

39.  Weekly  Comparison  of  Turnover 110 

40.  Weekly  Merchandise  Report  for   Buyers 113 

41.  Monthly  Tabulation   of   Expenses 117 

42.  Freight  Bill  and  Checked  Delivery  Receipt 118 

43.  Special    Express    Receipt 119 

44.  Distribution    of    Advertising 120 

45.  Diagram  showing  How  to  Calculate  Rent  for  Each  Department 124 

46.  Distribution   of   Rent 125 

47.  Distribution   of  Window   Display 126 

48.  Distribution  of  Insurance  and  Taxes 127 

49.  Distribution   of   General    Expense 129 

50.  Purchase  Order  Folder — Shoiving   how  distribution   of  orders   may  be  kept 

according  to   month   of  delivery 132 

51.  File  containing  Purchase  Order  Folders 137 


LIST  OF  FORMULAE 

FORMULA  PAGE 

No.     1.     Multiplication     28 

No.     2.     Division    30 

No.     3.     Proportion — One    Setting 31 

No.     4.     Proportion — More  than  one  Setting 31 

No.     5.     Continued    Multiplication    36 

No.     6.     Calculating   Salary  Percentages 46 

No.     7.     Calculating    Clerk's    Monthly    Salary   Percentages   on    Basis   of   Amount 

Earned    54 

No.     8.     Converting  Monthly  Distribution  of  Salary  Paid  into  Relative  Distribu- 
tion of   Salary  Earned 57 

No.     9.     Adjusting    Salary   Distribution 58 

No.  10.     Calculating  Percent   of   Mark-Up 61 

No.  11.     Finding   Required    Selling   Price,    Having    Given    the   Required   Percent 

of  Mark-Up   63 

No.  12.     Same — Another    Method    65 

No.  13.     To  Find  Required  Sales,  Having  Given  Expense,  %  Mark-Up,  %  Mark- 
Downs,  and  %  Net  Profit  Desired 85 

No.  14.     Formula    No.    13    Illustrated 85 

No.  15.     To  Find   Stock  Justified,   Having  Given   Sales,   Days   to  Sell,   and  Days 

in  Period   89 

No.  16.     Formula  No.   IS  Illustrated 89 

No.  17.     To    Find    Expense   Justified,    Having    Given    Last    Year's    Expense    and 

Increase  or  Decrease  of  Sales  Plan  from  Sales  Required 93 

No.  18.     Formula  No.   17  Illustrated 93 

No.   19.     Formula  No.   18  Illustrated 93 

No.  20.     Prorating  Season's  Plans  According  to  Months  in  Period 96 

No.  21.     Formula   No  20   Illustrated 96 

No.  22.     Calculating  Percent  of  Expense  to   Sales 97 

No.  23.     Calculating    Turnovers     Ill 

No.  24.     Distributing  Advertising   121 

No.  25.     Distributing    Advertising    121 

No.  26.     Distributing    Advertising    122 

No.  27.     Distributing    Advertising    122 

No.  28.     Distributing   Insurance   and   Taxes 128 

No.  29.     Distributing    General    Expenses 130 


CHAPTER  I 

INTRODUCTION 

THE  Slide  Rule  is  defined  as,  "  An  instrument  for  the  per- 
formance of  addition  and  subtraction,  which  is  con- 
verted into  an  instrument  for  the  mechanical  perform- 
ance of  multiplication  and  division  by  the  use  of  logarithmic 
scales  instead  of  scales  of  equal  parts." 

The  first  approach  to  this  invention  was  by  Edmund 
Gunter,  professor  at  Gresham  College  in  London  about  the 
year  1620.  His  rule,  however,  consisted  of  but  one  scale  and 
calculations  were  made  with  the  aid  of  compasses. 

In  the  year  1624,  Edmund  Wingate  introduced  Gunter's 
scale  into  France,  at  the  same  time  publishing  a  book  describ- 
ing its  usage  under  the  title,  "  Construction,  Description,  et 
Usage  de  la  Regie  Proportion."  Two  years  later  he  followed 
this  with  the  publication,  also  in  France,  of  tables  of  logar- 
ithms under  the  title,  "  Arithmetique  Logarithmetique."  In 
1645  he  published  in  England  under  the  title,  "The  Use  of  the 
Rule  of  Proportion,"  a  translation  of  his  French  work  of  1624. 

The  slide  is  said  to  have  been  invented  by  Oughtred, 
an  English  divine  and  mathematician  while  he  was  still  an 
undergraduate  in  King's  College,  Cambridge.  He  was  a  man 
who  set  little  value  upon  instrumental  aids  unless  in  the  hands 
of  those  who  had  previously  learned  sound  principles,  and  for 
this  reason  was  not  personally  responsible  for  the  introduction 
of  his  invention  to  the  public. 

In  1630,  Oughtred  showed  his  slide  rule  to  his  pupil, 
William  Foster,  who  obtained  his  consent  to  translate  and  pub- 
lish his  own  description  of  the  rule  with  instructions  for  using 
it.     This  was  done  in  London  in  the  year  1632,  under  the 


16  DEPARTMENT  STORE  STATISTICS 

title,  "  The  Circles  of  Proportion  and  the  Horizontal  Instru- 
ment." 

The  cursor,  or  runner,  was  devised  by  Mannheim  of  the 
Paris  Polytechnique  in  1851.  This  runner  enables  the 
operator  to  find  coinciding  points  on  any  of  the  scales  with 
greater  ease  and  also  permits  of  successive  calculations  being 
worked  out  without  the  necessity  of  reading  off  the  results. 

The  Slide  Rule,  while  being  the  oldest  known  mechanical 
instrument  for  performing  mathematical  operations  involving 
the  principles  of  multiplication  and  division,  has  not  found 
general  use  outside  of  engineering  circles.  Accountants  do 
not  seem  to  realize  its  infinite  value  to  them  in  calculating 
percentages,  prorating  expenses,  and  in  working  out  other 
tedious  complicated  calculations  or  it  would  find  a  more  com- 
mon use  for  commercial  purposes. 

There  is,  perhaps,  no  other  line  of  business  that  offers  as 
wide  a  range  of  uses  for  the  Slide  Rule  as  the  modern  depart- 
ment store.  The  task  of  preparing  the  necessary  daily, 
weekly,  and  monthly  reports  and  statements,  involving  as  they 
do,  column  after  column  of  percentages,  is  stupendous  and 
unless  the  store  is  fortunate  enough  to  secure  an  expert  math- 
ematician, often  impossible. 

There  is  a  general  impression  that  it  is  difficult  to  acquire 
sufficient  knowledge  of  the  Slide  Rule  to  make  its  use  practical. 
The  writer  has  taught  a  number  of  young  men  and  women  in 
different  offices  how  to  use  the  rule  and  has  found  it  very  easy, 
the  time  usually  required  being  only  two  or  three  days.  The 
ones  who  were  fortunate  enough  to  have  had  a  high  school  edu- 
cation learned  the  principles  very  rapidly.  While  a  knowl- 
edge of  higher  mathematics  is  essential  in  working  out  new 
formulae,  great  skill  in  solving  the  problems  after  the  formulae 
have  been  developed  may  be  easily  attained,  whether  the 
operator  is  an  advanced  mathematician  or  not. 


INTRODUCTION  17 

Frederick  W.  Taylor  in  his  much  quoted  book  on  Scien- 
tific Management,  has  referred  to  the  difiicult  task  which 
faced  them  in  the  steel  industry  in  finding  quick  solutions  to 
the  problems  relating  to  the  effect  of  certain  variables  upon 
the  cutting  speed  of  metals.  He  states  that  it  took  a  good 
mathematician  by  ordinary  means,  from  two  to  six  hours  to 
solve  one  of  these  complicated  mathematical  problems  and 
that  the  finding  of  a  means  of  getting  a  quick  solution  to  these 
problems  was  referred  to  one  after  another  of  the  noted  mathe- 
maticians of  the  country.  Any  reasonable  fee  was  offered 
for  a  practical  means  of  obtaining  a  rapid  solution,  but  that  not 
until  after  continuing  the  search  irregularly  over  a  period 
of  fifteen  years,  was  it  discovered  that  the  Slide  Rule  was  a 
practical  instrument  for  this  purpose.  By  the  aid  of  the  Slide 
Rule,  these  problems  could  be  solved  in  less  than  half  a  minute 
by  a  good  mechanic  whether  he  understood  mathematics 
or  not. 

In  the  writer's  own  experience,  he  has  seen  office  clerks  of 
ordinary  ability  prorate,  on  the  basis  of  sales,  an  item  of 
expense  among  forty-five,  or  more,  departments  and  finish  in 
less  than  twenty  minutes,  a  task  which  in  the  ordinary  way 
requires  from  one  to  two  hours.  It  is  easily  possible  to  acquire 
a  speed  of  seven  items  a  minute  in  figuring  percentages,  thus 
in  stores  employing  400  clerks,  the  percent  of  salary  for  each 
can  be  computed  in  less  than  an  hour  after  the  sales  and  the 
salary  for  a  corresponding  period  have  been  found. 

The  only  argument  which  any  person  has  made  against 
the  use  of  the  Slide  Rule  for  performing  these  operations  is, 
that  accurate  results  beyond  three  or  four  places  is  impossible. 
The  weakness  of  this  argument  is  shown  by  the  fact  that  de- 
partment store  managers  seldom  care  for  these  results  beyond 
the    third    digit;    to    them,    35.S1259'«    means    35.5%    and 


18  DEPARTMENT  STORE  STATISTICS 

t>.2i?>7%  is  considered  only  as  6.25%,  and  the  carrying  of  the 
decimals  beyond  these  points  is  of  no  practical  value. 

The  Slide  Rule  will  give  accurate  results  to  three  and 
sometimes  four  figures.  It  will  enable  the  department  store 
manager  to  get  his  reports  much  sooner  than  would  be  possible 
otherwise,  and  in  a  business  which  requires  the  vast  amount  of 
up-to-the-minute  information  which  is  demanded  by  the 
modern  department  store  the  Slide  Rule  cannot  but  be  a  most 
welcome  addition  to  the  mechanical  accounting  equipment. 


CHAPTER  II 

DESCRIPTION  OF  SLIDE  RULE  AND  GENER.AL  INSTRUCTIONS 

FOR  OPERATING 

AS  the  construction  of  the  Slide  Rule  is  based  on  the 
theory  of  logarithms,  before  beginning  to  study  the 
operation  of  the  rule,  it  will  be  best  to  first  acquire  some 
understanding  of  the  fundamental  principles  of  logarithms. 

Logarithms  Defined 

Logarithms  are  the  indexes  of  the  ratios  of  numbers,  one 
to  the  other.  They  are  a  series  of  artificial  numbers  used  for 
expediting  calculations  and  proceed  in  Arithmetical  Progres- 
sion as  the  numbers  they  answer  to,  do  in  Geometrical  Progres- 
sion. The  addition  and  subtraction  of  logarithms  answer  for 
the  multiplication  and  division  of  the  numbers  with  which 
they  correspond. 

Logarithms  Illustrated 

If  we  take  two  series  of  numbers,  the  one  forming  an 
arithmetical  progression  and  the  other  forming  a  geometrical 
progression,  as  follow^s: 

A.  P.— 0  12  3  4  5  6  7  8  9  10  &c. 
G.  P.— 1     2    4    8    16   32    64     128    256    512     1024    &c. 

and  place  the  terms  over  each  other  in  such  a  manner  that  0 
in  the  arithmetical  series  corresponds  with  1  in  the  geometrical 
series,  we  are  better  able  to  see  the  application  of  logarithms  in 
performing  calculations  involving  the  principles  of  multipli- 
cation and  division. 


20  DEPARTMENT  STORE  STATISTICS 

Multiplication   by  Logarithms 

The  sum  of  any  two  numbers  in  the  given  arithmetical 
series  comes  directly  above  the  product  of  the  corresponding 
terms  in  the  geometrical  series.  Thus  if  the  terms  in  the 
arithmetical  series  be  2  and  4,  those  in  the  geometrical  series 
will  be  4  and  16.  Now  2  +  4  =  6;  and  4X  16  =  64.  By 
comparing  these  results  with  the  series,  we  find  that  the  pro- 
duct, 64,  in  the  geometrical  series  is  directly  under  the  sum,  6, 
in  the  arithmetical  series. 

Division  by  Logarithms 

The  difference  between  any  two  terms  in  the  arithmetical 
series  comes  directly  above  the  quotient  of  the  corresponding 
terms  in  the  geometrical  series.  Thus,  if  the  terms  in  the 
arithmetical  series  be  8  and  3,  the  terms  in  the  geometrical 
series  will  be  256  and  8.  Then  8  —  3  =  5 ;  and  256  ^  8  =  32. 
By  comparing  these  results  we  find  the  quotient,  32,  in  the  geo- 
metrical series,  directly  under  the  difference,  5,  in  the  arith- 
metical series. 

Other  Common  Ratios 


While  the  common  ratio  in  the  preceding  series  is  2,  the 
same  principle  will  hold  good  for  any  ratio  as  will  be  seen  in 
the  following,  where  the  common  ratio  is  5 : 

A.  P.— 0    12       3       4         5  6  7  8   &c. 

G.  P.— 1    5    25    125   625    3125    15625   78125    390625   &c. 

Logarithmic  Scale  Described 

Figure  1,  here  shown,  is  a  logarithmic  scale  on  which  the 
radius  AB  may  represent  the  logarithm  10,  100,  1,000,  or 
10,000,  etc.     When  AB  represents  100,  then  the  points  1,  2,  3, 


DESCRIPTION  OF  SLIDE  RULE  21 

etc.,  will  represent  10,  20,  30,  etc.;  when  it  represents  10,000, 
then  the  points  1,  2,  3,  etc.,  will  represent  1,000,  2,000,  3,000, 
etc.,  and  the  points  1>^,  2>^,  3>4,  etc.,  will  be  1,500,  2,500, 
3,500,  etc. 


2  3  *'  ^  U  t  t  9 

f  r  r  rrl '  1 1 1  hiiiliiiiliiiiliiiiliiiiliiiiliiiiliiiiliiiiliiiiliiiLd^^^^^^ 


Figure  l,  A  Logarithmic  Scale 
Gunter's  Scale  Described 


Gunter's  Scale  is  illustrated  by  Figure  1.  You  will  see  on 
this  that  the  distance  from  1  to  2  is  the  same  length  as  the  dis- 
tance from  2  to  4  or  from  4  to  8 ;  also  that  the  distance  from  1 
to  3  is  the  same  as  that  from  3  to  9.  If  you  will  now  take  a 
pair  of  compasses  or  a  strip  of  paper  and  measure  off  the  space 
from  1  to  2,  then  place  one  leg  of  the  compasses  on  2,  you  will 
find  that  the  other  will  rest  on  4,  thereby  obtaining,  not  the 
sum  of  1  +  2,  but  the  product  of  2  X  2,  which  is  4.  Thus  also, 
if  the  space  from  1  to  2  be  joined,  by  the  aid  of  the  compasses, 
to  the  space  from  1  to  4,  the  result  will  be  the  product  of  2  X  4, 
which  is  8.     Likewise  find  the  products  of 

2X5; 

3X3; 

2X3. 

Determining  Values 

Now  let  the  line  AB  represent  100,  and  the  points  1,  2,  3, 
etc.,  10,  20,  30,  etc.  Then  1.5  will  represent  15  and  joining 
this  to  the  space  from  1  to  2  you  will  obtain  the  result  300. 
But  it  is  not  necessary  that  the  value  of  AB  be  uniform  for  both 
multiplicand  and  multiplier,  and  in  the  above  illustration,  if 
only  1.5,  representing  the  multiplicand,  is  increased  in  value 
to  be  15,  and  the  multiplier  is  not  accordingly  increased  but 


22  DEPARTMENT  STORE  STATISTICS 

Still  retains  the  value,  2,  the  result  will  be  read  30  instead  of 
300.  From  this  it  will  be  seen  that  the  divisions  on  the  scale 
may  be  increased  or  decreased  in  value,  according  to  the 
requirements  of  the  problem,  by  the  mere  shifting  of  the 
decimal  point  to  the  right  or  left,  or  by  annexing  ciphers. 

Examples  for  Practice 

Multiply  15  by  3; 
IS  by  4; 
25  by  4; 

35  by  2. 

Dividing  with   Gunter's  Scale 

In  the  beginning  of  this  chapter,  it  was  stated  that  the 
addition  and  subtraction  of  logarithms  answers  for  the  multi- 
plication and  division  of  the  numbers  with  which  they  corres- 
pond. In  the  preceding  examples  we  have  seen  how,  by  add- 
ing the  spaces  on  the  logarithmic  scale,  we  obtained  results 
agreeing  with  the  products  of  the  numbers  represented  by  these 
spaces.  Hence  it  follows  that  if  we  are  to  subtract  any  of 
these  spaces,  we  will  obtain  the  quotient  of  the  numbers  repre- 
sented. To  divide  45  by  3,  w^e  first  measure  off  the  distance 
from  1  to  3,  which  is  our  divisor;  then  placing  one  leg  of  the 
compasses  on  the  point  4.5,  we  find  the  other  leg  resting  on  1.5, 
but  as  the  value  45  was  assigned  to  the  point  4.5,  the  result  will 
be  read  15. 


Examples  for  Practice 


Divide  75  by  3; 
75  by  5; 
90  by  45 ; 
70  by  35. 


DESCRIPTION  OF  SLIDE  RULE 


23 


The  Slide 

History  tells  us  that  the  next  step  toward  the  production 
of  the  modern  Slide  Rule  was  made  when  Oughtred  substi- 
tuted for  the  compasses,  another  rule,  or  slide,  with  gradua- 
tions along  the  edge  to  correspond  with  the  graduations  on  the 
other.  An  example  of  such  a  combination  is  shown  in 
Figure  2. 


^  I    1-   r  r  r  r  r  r  r  rl  1  iiiriiiiliiuriiiMiiiniiiiiiitiiiiliiiiliiiiliiiiriiiiiiiiyiiiW 

D    1 

L    L  L  1.  L  1. 

UL  iiii[iiiiiiiii[iiii  iiiipi{i|iiiiyiii|iiii|iiiiiiip|iiipq 

l^r^rljiv^.  WiMj^ 

Figure  2,  Scales  C  and  D 


Scales   C  and  D 


In  order  to  distinguish  between  these  two  scales  in  our 
description,  we  will  call  the  upper  one  Scale  C  and  the  lower. 
Scale  D.  In  the  illustration,  the  "  left  index,"  on  Scale  C,  is 
set  to  coincide  with  the  point  2,  on  Scale  D. 


Operating  With   the  Slide 

If,  to  the  distance  from  1  to  2  on  Scale  D,  we  add  the  dis- 
tance from  1  to  2  on  Scale  C,  we  find  coinciding  with  the  point 
2,  on  Scale  C,  the  point  4  on  Scale  D,  and  this  is  the  product  of 
2X2.  Likewise  we  find  that  all  numbers  represented  on 
Scale  D  are  twice  the  coinciding  numbers  on  Scale  C. 

We  also  find  that  if  from,  the  distance  from  1  to  4  on  Scale 
D,  we  subtract  the  distance  from  1  to  2  on  Scale  C,  we  have  left 
on  Scale  D,  the  distance  from  1  to  2,  and  the  point  1  on  Scale 
C  coincides  with  the  point  2  on  Scale  D ;  from  this  we  discover 
the  principle  of  division.     Having  two  rules  instead  of  one,  is 


24 


DEPARTMENT  STORE  STATISTICS 


a  great  deal  more  convenient  and  does  away  with  the  necessity 
of  using  compasses  in  making  calculations. 

By  building  one  of  these  parts  larger  than  the  other  and 
providing  it  with  a  groove  into  which  the  smaller  part  is 
accurately  fitted,  so  that  it  may  be  easily  moved  from  right  to 
left  or  from  left  to  right,  these  two  parts  were  more  conven- 
iently handled.  The  smaller  part  which  fits  in  the  groove  is 
called  the  "  Slide." 


Other  Scales 

In  addition  to  Scales  C  and  D  illustrated  in  Figure  2, 
Slide  Rules  are  fitted  with  other  scales,  A  and  B.  The  gradu- 
ations on  Scales  A  and  B  are  so  much  closer  together  that  two 
complete  scales  are  placed  end  to  end  in  the  same  space  that  is 
occupied  by  either  Scale  C  or  D.  The  square,  therefore,  of 
any  number  found  on  Scale  D  will  be  found  at  the  coinciding 
point  on  Scale  A,  and  the  square  root  of  any  of  the  numbers 
found  on  Scale  A  will  be  found  directly  under  on  Scale  D. 


Left  Index 

\ 


Middle  Index 

1- 


Right  Index 

I 


3     |llll|llll|llll|llll|lill|llil(lli|l!!lll|l|l|l|^ 


SfHr 


!!lljl|l|l|l|l|l|i|l|iil|l|lil|l|l|l|l|lii[ljlii|iP^^^ 


iiiilmilHiJiiiilji.il! 


iiiiiliii  i!i|ii  mlt!  iii>ii 


i|ill|Plfflp  !lll|IIIMIIII|^^  -JOrtrlSKrWi      i|l  ||l|l|t||  i| 


:i  I  I      I    I 


J 


Left  Index 


Figure  3,  Diagram  of  Scales  and  Indexes  Right  Index 


Indexes 

Figure  3  is  an  illustration  of  the  complete  Slide  Rule 
showing  Scales  A,  B,  C,  and  D,  with  Right,  Left,  and  Middle 
Indexes  indicated,  and  Figure  4  shows  the  Slide  Rule 
equipped  with  the  Runner.  The  student  should  thoroughly 
familiarize  himself  with  the  terms,  runner,  index,  and  slide. 


DESCRIPTION  OF  SLIDE  RULE  25 

Divisions  of  Scales 

Carefully  examine  the  spaces  on  Scales  C  and  D.  It  will 
be  found  that  each  of  the  prime  divisions  1,  2,  3,  etc.,  are  again 
divided  into  ten  parts;  these  are  the  secondary  divisions. 
Between  the  prime  divisions  1  and  2,  the  secondary  divisions 
are  divided  into  ten  smaller  divisions,  from  2  to  4  into  five 
smaller  divisions,  and  from  4  to  the  Right  Index  into  two 
smaller  divisions.  These  divisions  of  the  secondary  parts  are 
called  tertiary  divisions. 


■KasssB^^Bais^aaas 


4ljj['°jTli;li[i|fflijia>l[i'i|il|iliiliildi'i|i|fiil]'ip^ 
[/|liii]wi|wiw|ia)|iijiiifaM|iiU4'W"''^^ 

«       •       J      J      J     J     J     iKtUfreL»tSSERC«.  K.Y.» 


Figure  4,  Slide  Rule  Complete  with  Runner 
Arbitrary  Value  of  Figures  on  Slide  Rule 

In  the  beginning  of  the  chapter,  it  was  stated  that  Logar- 
ithms are  a  series  of  arbitrary  numbers  used  for  expediting 
calculations.  The  student  must  clearly  understand  that  the 
figures  shown  on  the  Slide  Rule  have  an  arbitrary  value 
depending  on  the  primary  value  given  to  the  initial  1.  This 
primary  value  may  be  1,  10,  100,  or  1,000,  or  it  may  be  .1,  .01, 
.001,  and  this  ratio  must  be  observed  throughout  the  whole 
scale. 

Reading  Prime  Divisions 

When  we  make  the  value  of  the  Left  Index,  1,  then  the 
other  prime  divisions  will  be  2,  3,  etc. ;  if  it  is  .1,  the  others  will 
be  .2,  .3,  etc. ;  while  if  the  value  given  is  100,  the  others  will  be 
200,  300,  etc.  The  value  given  to  the  prime  divisions  depends 
entirely  on  the  number  being  used;  if  the  number  is  125,350, 
the  value  which  must  be  assigned  to  the  Left  Index  will  be 
100,000. 


26  DEPARTMENT  STORE  STATISTICS 

Reading  Secondary  Divisions 

When  the  value  100  is  assigned  to  the  Left  Index,  the  sec- 
ondary divisions  between  1  and  2  will  be  110,  120,  130,  .  .  . 
190,  200.  The  secondary  divisions  between  2  and  3  will  be 
read  210,  220,  230,  .  .  .  290,  300.  The  same  order  holds 
true  for  all  the  secondary  divisions.  When  the  value  100  is 
assigned  to  the  Left  Index,  the  value  of  the  Right  Index  will 
be  1,000. 

Reading   Tertiary  Divisions 

The  tertiary  divisions  between  the  Left  Index  and  the 
secondary  division  1  (the  value  of  the  Left  Index  still  remain- 
ing 100)  will  be  read  101,  102,  103  ..  .  109,  110;  between 
the  secondary  division  1  and  the  secondary  division  2,  the 
tertiary  divisions  are  read  111,  112,  113  .  .  .  119,120.  This 
order  continues  the  entire  distance  from  the  primary  division 
1  to  the  primary  division  2. 

Between  the  prime  divisions  2  and  4,  the  tertiary  divisions 
are  read  202,  204,  206  .  .  .  208,210,212,214  .  .  .  218, 
220,  222,  224,  .  .  .  228,  230,  etc.  From  the  prime  division 
4  to  the  Right  Index,  the  tertiary  divisions  are  read  405,  410, 
415  ..  .  495,  500,  505,  510  ..  .  905,  910  ..  .  990, 
995,  1,000. 

Real  Value  of  the  Divisions 

It  has  been  stated  before,  and  it  must  always  be  borne  in 
mind  that  the  real  value  of  any  of  these  numbers  depends 
entirely  on  the  value  given  to  the  initial  1,  and  this  real  value 
may  vary  so  that  the  position  405,  for  example,  may  be  read 
40.5,  4.05,  .405,  .0405,  4050,  or  40500.  The  problem  being 
solved  governs  entirely  the  real  value  of  the  initial  1. 


DESCRIPTION  OF  SLIDE  RULE  27 

Reading  Off  Results 

When  the  numbers  in  a  problem  contain  more  than  three 
figures,  the  positions  of  the  others  must  be  gauged  by  the  eye, 
but  with  a  little  practice  the  operator  will  experience  no  diffi- 
culty in  reading  off  all  numbers  of  three  and  four  figures.  In 
setting  and  reading  off  numbers  the  operator  begins  with  the 
figures  at  the  left  and  after  having  set  or  read  off  to  three  or 
four  places  considers  the  remainder  of  the  number  ciphers. 

Use  Scales  C  and  D 


By  reason  of  the  fact  that  more  space  is  allotted  to  each  of 
the  divisions  on  Scales  C  and  D,  it  is  possible  to  read  results 
more  accurately,  and  for  this  reason  all  calculations  described 
in  the  succeeding  pages  are  best  worked  out  on  these  scales. 
The  operations  could  be  performed  on  Scales  A  and  B  in 
exactly  the  same  manner  using  Scale  A  instead  of  D,  and  B 
instead  of  C,  and  inverting  all  the  formulae  given. 

Multiplication 

Calculations  involving  the  principle  of  multiplication  are 
performed  in  the  manner  illustrated  on  page  28. 

Relation  to  Proportion 

With  the  rule  set  in  the  position  shown  on  page  28,  the 
reader  will  observe  that  every  number  on  the  rule  bears  the 
ratio  of  2  to  1  to  every  coinciding  number  on  the  slide.  The 
problem  in  multiplication  illustrated  is  then  nothing  more 
than  the  simple  proportion,  1  :  2  : :  3  :  6.  It  is,  therefore, 
evident  that  if  in  any  proportion,  we  set  the  first  term  on  the 
slide  over  the  second  term  on  the  rule  the  third  term  on  the 
slide  will  coincide  with  the  fourth  term  on  the  rule. 


h 

o 

t 

t1 

n 

:i 

»*H 

T3 

J3 

O 
D. 

O 

w 

h 

•3 

V 

T3 

■o 

C 

c 

D 

b. 

14 

o 

u 

M 

VM 

CI 

a 

o 

u 

t> 

^j 

>> 

«5 

O 

U    Q 


U 


L_k~\l 


WO 


•2 


v> 


R   c\, 


ri'^ 


DESCRIPTION  OF  SLIDE  RULE  29 

Division 


The  formula  for  performing  operations  involving  the 
principle  of  division  and  illustrations  of  same  are  shown  on 
page  30. 

Relation  to  Proportion 

With  the  rule  set  in  the  position  shown  on  page  30,  the 
reader  will  also  observe  that  every  number  on  the  rule  bears 
the  ratio  of  9  to  1  to  every  coinciding  number  on  the  slide : 

1  on  the  slide  coincides  with    9  on  the  rule. 

2  on  the  slide  coincides  with  18  on  the  rule. 

3  on  the  slide  coincides  with  27  on  the  rule. 
5  on  the  slide  coincides  with  45  on  the  rule. 

Note :  The  reader  is  advised  to  investigate  this  principle 
thoroughly  as  a  distinct  understanding  of  it  leads  to  a  clearer 
comprehension  of  the  principles  of  the  Slide  Rule.  Set  the 
rule  with  1  on  the  slide  coinciding  with  7  on  the  rule  and  see 
that  the  ratios  of  the  numbers  on  the  slide  to  the  coinciding 
numbers  on  the  rule  are  as  1  to  7. 

Right  and  Left  Indexes 

In  the  succeeding  examples,  the  "1"  referred  to  has  hap- 
pened in  every  case  to  be  the  Left  Index  on  Scale  C,  but  the 
reader  must  remember  that  "Set  1,"  "Over  1,"  and  "Under  1" 
in  all  the  formulae  stated,  applies  with  equal  force  to  either 
the  right  or  the  left  index,  on  either  scale. 

In  the  problem,  8  X  5  =  40,  it  will  be  found  that  if  the 
Left  Index  be  set  on  8  on  the  rule,  that  the  other  factor  on 
the  slide  will  be  so  far  to  the  right  that  it  will  not  coincide 
with  any  number  on  the  rule.  This  being  the  case,  the  Right 
Index  on  the  slide  should  be  set  over  the  factor,  8,  on  the  rule, 


1V_4 


c 

t> 

o 

D 

,_ 

u 

J= 

ll 

■n 

-a 

c 

D 

b 

•9 

B 

V 

T3 

o 

in 

> 

> 

•5 

TD 

u 

J= 

u 

J= 

u 

V 

> 

CD 

o 

Uj  Q 


U     Q 


c 
.25 

Q 


"X 


^  / 


Find  the  value  of  X  in  the  proportion  45  :  20  ;:  12  ;  X 
( See  Formula  of   page  3 1 ) 


'"i""||"|||'"i»i'pi "Wi'i'i'i'i'i'i'i'ina piii|p)|i|i|i|i|i|ijlii|lllljliii|iiijliii|l«|iii|iy^^^^^ 


"i'"'i' "i''"i"iii'»'i'>'ii'' i"inj; i;i<.Lii.i:i.!.i| .iimtmii 


l,,,,l,.,,1,,M,,,,f,„,    V   ,,  ? 


C  Sel  45  '       Ral  Righl  Index 

b  Over  20 


I" t I I-I ilirili[il.l,J,l.l,f,H,lil,l,l,Mili U,l,liM? liiiiiliiiil I ill.) 


tl|l4i|lflWlfl'l'l'*P'||i|' 


I-..- I I '.1....^M,I.,, L.,.,.,jJ 


jiMi|iiii|iin|im|mi|mi|iiii|iiii|iiii|iiii|iii|iiii|Hii|iii|»ii|iiii|iii|iy^ 


10  R  Under 


\      Find  5.33 
Figure  7,  Proportion  Jltlislrated 


DESCRIPTION  OF  SLIDE  RULE 


31 


then  5  on  Scale  C  will  coincide  with  4   (which  by  inspec- 
tion is  read  40)  on  Scale  D. 

Proportion 

In  the  illustrations  given,  the  reader  has  seen  the  princi- 
ples of  proportion  applied  in  the  problems  of  multiplication 
and  division.  One  of  the  underlying  principles  of  the  Slide 
Rule  is  that,  no  matter  in  what  position  the  rule  is  set,  all 
numbers  on  the  slide  will  bear  the  same  ratio  to  the  coinciding 
numbers  on  the  rule. 

In  the  proportion,  12  :  30  : :  20  :  X,  we  find  the  value  of 
X  in  the  following  manner: 


Set  first  term 


FORMULA  No.  3 
— 12  I        Under   third   term — 20 


Over   second   term — 30 


Find    fourth    terra — 50 


The  solution  of  the  following  proportion  is  a  little  more 
complicated : 

45  :20  ::  12  :X 

The  formula  which  has  been  stated  for  proportion  is  again 
used  but  when  45  is  set  over  20,  the  point,  12,  on  the  slide,  does 
not  coincide  with  any  number  on  the  rule;  this,  then,  makes  a 
second  setting  of  the  slide  necessary.    See  Figure  7  on  opposite 

FORMULA  No.  4 


c 

Set  45 

Bring  Runner 
to  right  Index 

Drav7  Slide  to 
right  until  Left 
Index  is  under  Runner 

Under    12 

D 

Over  20 

Find    5.33 

page.  First,  the  Runner  is  moved  to  coincide  with  the 
Right  Index,  then  the  slide  is  drawn  to  the  right  until  the  Left 
Index  coincides  with  the  Runner.  After  this  is  done,  the 
result  is  found  on  Scale  D,  coinciding  with  the  point,  12,  on 


32  DEPARTMENT  STORE  STATISTICS 

Scale  C.  A  clearer  understanding  of  these  settings  may  be 
gained  by  a  careful  study  of  Figure  7  and  by  a  comparison  of 
same  with  the  formula  shown. 

The  Runner 


These  secondary  settings  of  the  slide  are  necessary  when- 
ever the  third  term  of  the  proportion  lies  beyond  the  rule, 
either  to  the  right  or  to  the  left.  The  use  of  the  Runner  in 
cases  of  this  kind  very  greatly  facilitates  the  speed  with  which 
these  calculations  may  be  made.  Without  the  Runner,  the 
result  of  20  -^  45  would  first  have  to  be  "  read  ofif,"  then  the 
left  index  would  have  to  be  set  to  coincide  with  this  result 
before  the  value  of  X  on  Scale  D  could  be  found  coinciding 
with  12  on  the  slide. 


CHAPTER  III 

THE  DECIMAL  POINT 

THE  location  of  the  decimal  point  may,  in  most  cases,  be 
left  to  inspection,   but  there  may  be  times  when   the 
operator  will  need  to  employ   rules   to   determine  its 
exact  position. 

Characteristics 


The  position  of  the  decimal  point  is  determined  by  means 
of  the  number  of  characteristics  in  the  factors.  The  number 
of  figures  in  the  integral  part  of  a  number  is  called  its 
characteristic. 

2  is  the  characteristic  of  12.165 

1  is  the  characteristic  of    2.124 

0  is  the  characteristic  of  .257 
-1  is  the  characteristic  of  .065 
-2  is  the  characteristic  of      .005 

MULTIPLICA.  TION 

Slide  Projecting  to  Left 

When  the  product  is  obtained  with  the  slide  projecting 
to  the  left,  its  characteristic  is  the  sum  of  the  characteristics  of 
the  two  factors.  Example  3.5  X  8  =  28.  The  sum  of  the 
characteristics  is  two,  therefore  as  the  slide  projects  to  the  left, 
the  characteristic  of  the  product  is  composed  of  two  figures 
and  the  decimal  point Js  placed  after  the  8. 


34  DEPARTMENT  STORE  STATISTICS 

In  the  problem,  .0825  X  25,  the  characteristic  of  the  first 
factor  is  -1  and  the  characteristic  of  the  second  factor,  2. 
The  sum  of  these  two  characteristics  is  1,  hence  the  result  is 
read,  2.06. 

In  the  problem,  .0825  X  .00325,  the  characteristic  of  the 
first  factor  is  -1  and  the  characteristic  of  the  second,  -2,  and 
the  sum  of  the  characteristics  is  -3.  The  slide  projects  to  the 
left  and  the  result  is  read  off,  .00027. 

Slide  Projecting  to  Right 

When  the  product  is  obtained  with  the  slide  projecting  to 
the  right,  its  characteristic  is  the  sum  of  the  characteristics  of 
the  two  factors  less  I.  Example:  1.8  X  4.5  =  8.1.  Here  the 
sum  of  the  characteristics  of  the  two  factors  is  2,  but  as  the 
slide  projects  to  the  right,  the  characteristic  of  the  product  is 
1  and  the  result  is  read  8.1. 

In  .0125  X  28,  the  characteristic  of  the  first  factor  is  -1 
and  the  characteristic  of  the  second  factor,  2.  The  sum  of  the 
two  characteristics  is  1,  but  as  the  slide  projects  to  the  right, 
the  characteristic  of  the  product  is  /  less  than  the  sum  of  the 
characteristics  of  the  two  factors,  and  the  result  is  read,  .35. 

In  the  problem  .21  X  .35,  the  characteristic  of  each  factor 
is  0  and  the  sum  of  the  characteristics  is  0,  but  as  the  slide  pro- 
jects to  the  right,  the  characteristic  of  the  product  is  1  less  than 

0  which  makes  it  -1,  and  the  result  is  read,  .0735. 

If  the  numbers  to  be  multiplied  are  .0175  and  .00314,  the 
characteristic  of  the  first  factor  is  -1  and  the  characteristic  of 
the  second  -2,  and  the  sum  of  the  characteristics  -3 ;  but  as  the 
slide  projects  to  the  right,  the  characteristic  of  the  product  is 

1  less  than  -3,  which  is  -4,  and  the  result  is  read  .000055. 


THE  DECIMAL  POINT  35 

DIVISION 

Slide  Projecting  to  Left 

When  the  quotient  is  obtained  with  the  slide  projecting 
to  the  left,  its  characteristic  is  the  characteristic  of  the  divi- 
dend less  that  characteristic  of  the  divisor.  Example: 
25  ^  5  =  5.  The  characteristic  of  the  dividend  is  2,  the 
divisor,  1,  the  difference  of  the  characteristics,  1,  and  the  result 
is  read,  5. 

In  the  problem  .0125  ^  25,  the  characteristic  of  the  divi- 
dend is  -1,  the  characteristic  of  the  divisor,  2;  the  difference  of 
the  characteristics  is  -3  and  the  result  is  read  .0005. 

If  we  divide  .0004  by  .005,  the  characteristic  of  the  divi- 
dend is  -3,  the  characteristic  of  the  divisor,  -2,  making  the 
characteristic  of  the  quotient  -1  and  the  result  is  read,  .08. 

Slide  Projecting  to  Right 

When  the  quotient  is  obtained  with  the  slide  projecting 
to  the  right,  its  characteristic  is  the  characteristic  of  the  divi- 
dend less  the  characteristic  of  the  divisor,  this  difference 
increased  by  I.  Example:  87.5-^3.5  =  25.  The  character- 
istic of  the  dividend  is  2,  the  divisor,  1,  but  as  the  slide  pro- 
jects to  the  right,  the  difference  is  increased  by  1  making  the 
characteristic  of  the  quotient,  2,  and  the  result  is  read  25. 

In  the  problem,  .0075  -^  .00135,  the  characteristic  of  the 
dividend  is  -2,  the  characteristic  of  the  divisor,  -2,  making 
the  difference  0,  but  as  the  slide  projects  to  the  right,  this  dif- 
ference is  increased  by  1,  making  the  characteristic  of  the 
quotient  1,  and  the  result  is  read  5.55. 

A  .•  "  '^  "" 


36  DEPARTMENT  STORE  STATISTICS 

Decimal  Indicator 


If  the  runner  is  equipped  with  a  decimal  indicator  as 
illustrated  by  Figure  8,  it  will  be  a  great  aid  to  the  operator  in 
keeping  track  of  the  characteristics,  especially  when  there  are 


Figure  8,  Decimal  Indicator 

several  factors  to  be  multiplied,  or  where  there  is  a  combina- 
tion of  multiplications  and  divisions. 

Continued  Multiplication 

For  the  solution  of  the  problem  8.5  X  2.14  X  42  X  .035, 
the  formula  is, 

FORMULA  No.  5 


c 

Set  1 

Runner 
to  2.14 

Left  Index 
to  Runner 

Runner 
to  42 

Right  Index 
to  Runner 

Under  .035 

D 

Over  8.5 

Find   26.7 

In  the  first  operation,  8.5  X  2.14,  the  slide  projects  to  the 
left  and  the  characteristic  of  the  product  is  2;  in  the  second 
operation,  multiplying  by  42,  the  characteristic  of  the  second 
factor  is  2,  which  when  added  to  the  characteristic  of  the  first 
product,  gives  the  resulting  characteristic,  4,  but  as  the  slide 
projects  to  the  right,  this  must  be  decreased  by  1,  hence  the 
characteristic  to  this  point  is  3.  The  characteristic  of  the 
last  factor  is  -1,  and  as  the  slide  projects  to  the  left,  the  char- 
acteristic of  the  final  product  is  the  sum  of  the  characteristics 
3  and  -1,  which  is  2,  and  the  result  is  read  26.7. 


^ 


7^2^ 


9?< 


/^ 


1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

10. 

11. 

12. 

13. 

14. 

15. 
16. 
17. 
18. 
19. 
20. 


21. 

22. 


CHAPTER  IV 


PROBLEMS   FOR  PRACTICE 


Multiply  12  by  1^. 
Multiply  186  by  175. 
Multiply  12  X4X3  X5. 
Multiply  49^  by  2.25. 
Multiply  .0085  by  .0002. 
Multiply  .0115  by  .000007. 
Divide  1^  by  4. 
Divide  65  by  16.25. 
Divide  175  by  5. 
Divide  1.45  by  3.5.^ 
Divide  $7,850.00  by  71. 
Divide  $925  by  $220.00. 
Solve  71  X  35  ^  16  X  7.05  ^ 
Solve  12X35 


1.5. 


7 
Solve  12 
Solve  25 
Solve  18 
Solve  33 
Solve   ?  : 


X  6 

:20 
:35 
:30 
:  ?  :: 
17.5 


9  :X. 
40  :X. 

?  :  20. 
11  :  20. 
:  60  : 7.5. 


11 


\    7/t>'^.0 


7  -•> 


'-/  ojs^ 


I  fo. 


An  English  Sovereign  is  equal  to  approximately  $4.86  in 

United  States  currency;  what  is  the  value  of  15  English 

Sovereigns? 

An  article  of  merchandise  which  costs  $162.50  is  marked 

to  sell  for  $250.00 ;  what  is  the  percent  of  Mark-Up  ? 

A  clerk  whose  salary  for  a  certain  period  was  $52.75,  has 

sold  during  this  period  $810.00  worth  of  merchandise; 

required  the  percent  of  salary  to  sales. 


38  DEPARTMENT  STORE  STATISTICS 

23.  Divide  $720.00  among  A,  B,  and  C,  in  proportion  of  2, 
3,  and  4. 

Note — Set  the  sum  of  2,  3,  and  4  to  coincide  with  $720.00.  Under  each  of  the  terms 
find  the  proportional   amount 

24.  Find  2-3  of  12. 

Note — Try  this  by  using  the  proportion  3  :2  ::  12  :X. 

25.  At  what  price  must  I  sell  an  article  which  costs  $1.25  if 
my  expenses  amount  to  25%  of  my  sales  and  I  still  wish  to 
clear  8%  ? 

Note— 100%  Selling  Price;  25%  +  8%  =  33%  Gross  Profit  Required;  100%o — 
33%  =  67%  Cost;  then  67%  =  $1.25.  Find  the  selling  price  by  dividing 
$1.25  by  .67,  or  by  solving  the  proportion  .67  : 1.25  ::  1  :  X. 


CHAPTER  V 

PAY  ROLL  STATISTICS 

THE  Pay  Roll  is  perhaps  the  hardest  of  all  items  of  a 
store's  expense  to  control.     In  a  fully  organized  depart- 
ment store,  the  pay  roll  percentage  for  the  entire  store 
including    selling    departments,    administration,    office,    and 
delivery  will  average  from  14%  to  15%  of  the  sales. 

Human  Element  to  be  Overcome 

The  human  element  plays  a  very  strong  part  in  maintain- 
ing the  standard  set  for  this  item  of  expense.  The  stores 
which  have  the  more  highly  developed  organizations  and 
which  pay  great  attention  to  the  things  which  will  promote 
the  highest  degree  of  efficiency  in  the  employees  will  of  course 
be  able  to  maintain  a  much  lower  percentage  than  those  con- 
cerns which  pay  little  or  no  attention  to  this  important  feature. 

Frequent  Checking  Necessary 

Frequent  and  regular  checking  of  the  results  obtained,  is 
necessary  in  order  to  pick  out  the  weak  spots.  More  sales  are 
lost  through  the  indiflference  of  the  salespeople  than  through 
any  other  source,  and  it  would  seem  that  the  manager  would 
give  more  attention  to  this  condition  and  the  results  of  each 
salesperson's  efforts  than  perhaps  any  other  feature  of  the 
store's  activities.  The  fountain  can  rise  no  higher  than  its 
source;  the  future  growth  of  the  store  depends  entirely  on 
the  efficiency  of  the  employees,  and  the  first  step  in  the 
developing  of  this  efficiency  lies  in  locating  the  weak  spots. 


40  DEPARTMENT  STORE  STATISTICS 

Many  Percentage   Calculations  Involved 

On  account  of  the  seemingly  endless  percentage  calcula- 
tions involved  in  the  preparation  of  salary  statistics,  many  of 
the  stores  have  found  it  impossible  to  prepare  the  essential 
reports  and  deliver  them  into  the  hands  of  the  general  man- 
ager with  such  a  degree  of  promptness,  that  this  official  will 
be  able  to  get  full  value  out  of  them. 

Reports  Required 

The  general  manager  and  the  superintendent  should  be 
furnished  weekly  reports  showing  the  percentage  of  each  clerk 
in  the  store  and  the  standing  of  the  clerks  in  the  departments 
to  which  they  belong  together  with  weekly  reports  by  depart- 
ments showing  sales  for  the  week,  number  of  employees  on 
duty,  salary  paid,  and  the  relative  percentages,  all  compared 
with  the  results  the  year  previous,  or  with  a  set  standard. 
These  have  been  considered  in  many  cases,  entirely  out  of  the 
question.  The  Slide  Rule  makes  them  possible.  Percentages 
can  be  figured  at  the  rate  of  from  7  to  10  a  minute,  thus  mak- 
ing it  possible  to  calculate  the  percent  of  salary  for  each  of  300 
clerks  in  45  minutes  or  less. 


PAY  ROLL  STATISTICS  41 

Pay  Roll  Percentages 

Art  Embroideries   7.0     10.3     15.7     13.0 

Bakery   (Selling  Only) 7.0 

Books   6.0 

Candy   6.0 

Carpets,  Mattings,  Rugs,  Lino.,  Etc.   5.5 

China   and   Glassware 5.5 

Clothing  (Men's  and  Boys') 5.0 

Corsets   4.0 

Dress  Goods 5.2 

Druggists'   Sundries    6.0 

Fish  and  Meats 5.0 

Furniture 5.5 

Gloves 5.0 

Groceries  6.0 

Hosiery  and  Knit  Underwear 6.0 

Housefurnishings   5.0 

Infants'  Wear 5.0 

Laces  and  Embroideries 6.0 

Jewelry  and  Leather  Goods 6.0 

Linens  and  White  Goods 5.0 

Men's  Furnishings    6.0 

Millinery 5.5 

Muslin  Underwear 6.0 

Neckwear  and  Veilings 6.0 

Notions 6.5 

Shoes  of  all  kinds 4.0 

Silks  and  Velvets 5.0 

Stationery    7.0 

Suits  and  Cloaks 6.0 

Toys   3.5 

Trunks  and  Baby  Carriages 7.0 

Upholsteries    4.5 

Waists  4.5 


8.9 

8.9 

8.6 

7.7 

8.3 

32.6 

15.2 

8.2 

9.6 

6.8 

13.8 

8.55 

9.02 

10.2 

11.5 

7.4 

6.2 

6.65 

6.95 

8.7 

7.9 

5.8 

9.0 

7.5 

7.5 

4.5 

6.8 

7.7 

10.9 

8.5 

6.2 

7.7 

7.3 

6.5 

4.8 

5.3 

6.9 

7.2 

7.8 

12.4 

9.8 

10.6 

7.1 

10.8 

9.2 

10.5 

8.45 

9.0 

9.3 

8.9 

7.5 

6.7 

5.6 

7.1 

7.8 

9.1 

10.3 

10.4 

9.1 

7.7 

5.9 

8.0 

5.8 

7.5 

8.6 

10.3 

9.9 

8.2 

9.3 

6.7 

i.7 

5.0 

10.5 

26.6 

5.8 

S.7 

6.1 

11.4 

7.1 

7.8 

8.0 

8.3 

9.5 

8.2 

11.3 

7.^ 

6.2 

7.5 

6.4 

42  DEPARTMENT  STORE  STATISTICS 

Fluctuation  of  Salary  Percentages 

The  last  three  columns  in  the  foregoing  table  show  actual 
average  results  obtained  in  the  various  departments  named  in 
different  stores,  working  under  practically  the  same  condi- 
tions, in  towns  of  equal  size,  while  the  first  column  shows 
what  might  be  considered  a  fair  standard  for  wages  in  these 
departments.  The  actual  results  given  show  a  very  wide 
variation,  and  while  the  results  shown  are  from  different 
sources,  it  would  not  be  difficult  to  find  cases  where  the  fluctua- 
tions in  the  same  concern  in  three  years,  unless  the  situation 
was  properly  controlled,  would  be  as  great. 

Control  of  Pay  Roll  Expense 

During  the  busy  season,  extra  help  must  be  engaged,  but 
when  business  begins  to  drop  off,  there  should  be  a  corres- 
ponding contraction  in  the  Pay  Roll.  This  will  not  be  the 
case,  however,  unless  there  is  a  constant  and  careful  inspec- 
tion of  the  Pay  Roll  and  a  comparison  of  the  amount  expended 
for  wages  with  the  sales  for  the  corresponding  period,  and 
with  the  standards  which  should  be  maintained  by  each  of 
the  departments. 

Perhaps  the  best  standard  with  which  to  compare  the 
results  of  the  current  year  is  the  results  last  year,  and  to  see 
that  these  results  are  maintained  in  every  instance.  Where 
last  year's  results  seem  to  be  unreasonably  high,  it  is  well  to, 
at  the  same  time,  set  an  arbitrary  standard  and  to  frequently 
check  the  results  against  this. 

Weekly   Census  Report 

Figures  9A  and  9B  show  a  form  of  weekly  census  report. 

This  is  one  report  of  which  Figure  9A  forms  one  side 

and  Figure  9B  forms  the  other.     Figure  9A  shows  the  results 


COMPARATIVE   DEPARTMENTAL  RECORD— SALES 

HELP 

Week  Ended  Ap 

ril  9,  1910 

SALES 

EMPLOYEES 

- 

SALARIES 

%  OF  SALES 

DEPT. 

1909 

1910 

'09 

'10 

1909 

1910 

1909 

1910 

1 

435.02 

330.84 

5 

3 

37.48 

29.00 

8.6  % 

8.8  % 

2 

306.32 

288.60 

5 

4 

30.00 

22.33 

9.8  % 

7.75% 

3 

826.97 

1,047.79 

4 

5 

48.00 

56.00 

5.8  % 

5.35% 

4 

2,607.45 

2,727.41 

12 

10 

126.04 

138.09 

4.82% 

5.05% 

5 

965.58 

836.97 

4 

4 

78.75 

73.00 

8.15% 

8.72% 

6 

1,242.08 

709.07 

6 

6 

73.00 

85.66 

5.85% 

12.1  % 

7 

563.57 

638.69 

7 

8 

42.50 

49.50 

7.55% 

7.8  % 

8 

2,902.86 

3,610.66 

11 

11 

147.25 

180.09 

5.7  % 

5.     % 

9 

328.50 

513.29 

4 

6 

28.21 

44.17 

8.6  % 

8.6  % 

10 

265.46 

246.64 

3 

3 

18.80 

19.33 

7.1  % 

7.85% 

11 

566.30 

820.44 

8 

9 

61.50 

70.35 

10.8  % 

8.57% 

12 

433.46 

323.86 

6 

9 

44.41 

63.27 

10.25% 

19.5  % 

13 

64.56 

135.32 

1 

1 

9.50 

10.00 

14.7  % 

7.4  % 

14 

786.92 

1,785.04 

4 

3 

66.50 

63.00 

8.47% 

3.52% 

15 

269.64 

565.25 

1 

1 

12.00 

12.00 

4.45% 

2.12% 

16 

145.60 

201.13 

2 

4 

13.17 

24.33 

9.05% 

12.1   % 

17 

502.02 

442.37 

6 

3 

45.75 

24.00 

9.1  % 

5.45% 

18 

476.93 

800.17 

3 

5 

36.00 

50.50 

7.55% 

6.3  % 

19 

401.40 

604.99 

2 

3 

20.53 

27.00 

5.1  % 

4.48% 

20 

670.97 

1,109.46 

5 

5 

64.26 

50.50 

9.55% 

4.58% 

21 

482.59 

367.14 

11 

9 

76.08 

50.25 

15.8  % 

13.7  % 

22 

291.97 

270.87 

5 

3 

25.00 

29.00 

8.6  % 

10.75% 

23 

262.87 

259.59 

3 

1 

32.75 

16.00 

12.5  % 

6.18% 

14.5  % 

24 

232.43 

147.05 

3 

4 

13.50 

21.42 

5.82% 

25 

86.56 

106.42 

2 

2 

17.00 

18.00 

19.65% 

16.9  % 

26 

416.14 

1,247.41 

4 

5 

62.67 

85.00 

15.     % 

6.82% 

27 

40.82 

69.79 

2 

2 

9.00 

8.00 

22.     % 

11.5  % 

10.58% 

28 

135.05 

163,96 

2 

3 

14.00 

17.50 

10.35% 

29 

45.20 

81.59 

2 

3 

10.00 

17.00 

22.1  % 

20.8  % 
29.1   % 

30 

229.60 

204.80 

11 

11 

65.00 

59.50 

28.2  % 

Total 

17,265.34  20,656.61 

137 

145 

,328.65 

1.481.79 

7.7  % 

7.19% 

U 

III 

Figure  qA,  Weekly  Census  Report — Sales-help 


COMPARATIVE  DEPARTMENTAL  RECORD— DEAD  HELP 
Week  Ended  April  9,  1910 


DEPARTMENTS 


EMPLOYEES 
1909      1910 


SALARIES 


1909 


1910 


%  OF  SALES 

1909       1910 


Office 

Wrappers  and  Cash  Girl; 

Delivery  Room    

Drivers 

Order  Rooms 

Janitors 

Elevators  

Advertising 

Telephones 

Receiving  Room    

Management 


26 

26 
4 

10 
5 
9 
3 
3 
1 
3 

12 


24 
4 

14 

9 


5 

1 

2 

15 


220.73 
79.58 
54.33 
85.50 
37.08 
99.16 
16.33 
40.00 
8.00 
28.00 

175.00 


254.67 
70.00 

62.00 

154.17 

82.50 

96.00 

25.83 

78.50 

9.50 

22.33 

198.00 


1.28% 
0.46% 
0.32% 
0.49% 
0.21% 
0.56% 
0.09% 
0.23% 
0.04% 
0.16% 
1-01% 


1.23% 
0.34% 
0.3  % 
0.75% 
0.4  % 
0.47% 
0.13% 
0.38% 
0.04% 
0.11% 
0.96% 


Total 


102      119 


843.71      1.053.50 


4.88%     5.11% 


RECAPITULATION 

Sales  Help 137 

Dead  Help 102 

Total 239 


145   1,328.65 
119      843.71 


1,481.79 
1,053.50 


7.7  %     7.19% 
4.88%     5.11% 


2.172.36  2,535.29  12.58%  12.30% 


SALES 


1910 $20,656.61 

1909 17,265.34 

Increase... .$  3,391.27—19.6% 


Figure  qB,   Weekly   Census  Report — Dead-help 


V 


\ 


PAY  ROLL  STATISTICS  45 

of  the  operations  of  the  Selling  departments  while  Figure  9B 
shows  the  results  of  the  Non-Selling  and  a  recapitulation  of 
the  total  results. 

In  order  to  get  this  report  out  most  promptly,  it  should 
be  started  toward  the  close  of  the  week  prior  to  the  date  it  is  to 
be  rendered.  All  the  results  of  last  year  should  be  entered 
and  the  percentages  figured.  In  many  stores  the  wages  are 
paid  each  Tuesday  for  the  previous  week,  and  when  this  is 
done,  the  census  report  should  be  on  the  General  Manager's 
desk  not  later  than  noon  on  Wednesday;  this  will  give  him 
ample  time  to  plan  adjustments  which  may  be  necessary, 
before  the  coming  Saturday;  but  if  the  report  is  delayed  so 
that  it  does  not  reach  him  on  Wednesday,  it  may  be  too  late 
for  him  to  intelligently  plan  these  adjustments. 

Getting  the  Information   Together 

The  auditors  should  complete  the  audit  of  the  week's 
sales  by  Monday  evening  and  be  ready  early  Tuesday  morning 
to  make  a  report  of  the  week's  sales  to  the  statistician.  By 
this  time,  also,  the  pay  clerk  should  be  able  to  render  a  report 
showing  the  amount  of  salary  being  paid  for  each  department 
and  the  number  of  employees  in  each. 

Worse   Conditions  Entered  in  Red 


As  this  year's  data  is  entered  on  the  census  report,  all 
items  which  show  a  worse  condition  than  a  year  ago,  are 
entered  in  red,  as  a  "  danger  signal,"  to  point  out  to  the  busy 
executive  the  things  which  require  his  attention  without  mak- 
ing it  necessary  for  him.  to  "  dig  "  them  out  himself.  When 
the  sales  this  year  fall  below  those  of  last,  or  when  the  number 
of  employees  in  a  department  or  the  amount  of  salary  paid  is 
more,  or  the  percent  of  wages  higher,  the  entry  should  be  made 
in  red. 


46  DEPARTMENT  STORE  STATISTICS 

Formula  for  Calculating  Percent 

On  Form  9A,  each  of  the  amounts  of  wages  is  divided  by 
the  sales  of  the  corresponding  department  to  find  the  percent, 
but  on  Form  9B,  each  of  the  amounts  of  wages  is  divided  by 
the  total  sales  of  the  store  for  the  week.  The  formula  for 
setting  the  rule  to  calculate  the  percentage  is: 

FORMULA  No.  6 
Set  Sales  I      Under  1 


Over  Salary  '      Find  percent 


Set      $435.00 


Illustration:     Sales  $435.00,  Salary  $37.48 
Under  1 


Over  $  37.48  Find  8.6 

After  First  Year 

When  this  report  has  been  in  operation  a  year,  the  labor 
necessary  to  prepare  it  is  greatly  diminished,  for  from  the 
copy  of  the  previous  year's  report,  the  sales,  salaries,  number 
of  employees,  and  percentages  may  be  copied  to  the  current 
year's  report. 

Weekly  Reports  Not  Sufficient 

On  account  of  the  fluctuations  of  percentages  in  these 
weekly  reports,  they  should  be  supplemented  with  other 
reports  which  cover  longer  periods  and  show  the  general 
average;  these  may  be  in  the  form  of  a  comparative  monthly 
report,  or  a  cumulative  report  showing  a  comparison  of  the 
results  from  the  first  of  the  current  fiscal  year,  or  season,  with 
the  corresponding  results  the  previous  year.  Figure  10  shows 
a  report  of  this  kind  covering  a  year's  operations. 


Sh> 


COMPARISON  OF  SALES  AND  SALARIES  WITH 
RELATIVE  PERCENT 


For  the  Year  Ended  Jan.  31,  1913 


DEPT. 


SALES 
THIS  YR.  LAST  YR. 


SALARIES 
THIS  LAST 


THIS 


LAST 


1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 


22,737.49 
19,913.49 
25.459.75 

123,181.16 
33,023.89 
59,776.59 
38,582.58 

171,727.03 
22,473.34 
12,592.86 
32,224.94 
33,592.22 
10,981.73 
29,991.25 
12,334.05 
11,684.60 
21,403.75 


27,763.30 
25,954.38 
23,783.22 
78,627.35 
50,471.61 
61,929.55 
15,431.14 
195,322.48 
30,280.62 
16,732.12 
34,988.41 
40,555.97 
15,269.80 
42,643.83 
17,756.91 
16,212.50 
23,596.24 


1,790.65 
1,427.28 
2,634.44 
7,023.94 
3,722.38 
4,854.97 
2,563.93 
8,269.75 
1,564.41 

972.09 
3,147.30 
2,865.85 

784.44 
2,881.72 
1,396.74 

897.05 
2,189.86 


1,612.81 
2,025.12 
2,161.13 
4,818.78 
3,727.03 
5,736.32 
1,078.17 
10,237.80 
2,051.57 
1,206.36 
3,724.88 
3,656.56 
1,173.45 
2,846.24 
1,246.89 
1,349.16 
1,989.96 


7.9  % 
7.15% 

10.4  % 
5.7  % 

11.5  % 
8.15% 
6.65% 
4.82% 
6.95% 
7.7  % 
9.75% 
8.55% 
7.13% 
9.64% 

11.3  % 

7.7  % 

10.5  % 


5.82% 
7.8  % 
9.1  % 
6.12% 
7.4  % 
9.25% 
6.95% 

5.25% 
6.8  % 
7.25% 
10.6  % 
9.02% 
7.75% 
6.8  % 
7.05% 
8.32% 
8.45%, 


Total 


796,108.00    969,485.90 


62,245.68    69,550.54 


7.8  %      7.2  % 


Figure  lO,  Annual  Comparison  of  Sales  and  Salaries 


48  DEPARTMENT  STORE  STATISTICS 

Compare  Results  with  Standard 

The  current  percentages  shown  on  the  reports  illustrated 
by  Figures  9A,  9B,  and  10  should,  also,  in  addition  to  being 
compared   with   the   percentages   of   the    previous   year,    be 


WCEK 
np.PT.                                                 ENDED 

DEPT. 

NAME 

STAND. 
ISC 

NAME                                                            SALES              TaYa^rv 

1> 

STAND- 
ING 

BUYERS  WILL  POST  THIS  REPORT 

IN  DEPT.     FOR  CLERKS 

ATTENTION 

TOTAL    t                                               TOTAL 

i                                                 AVE 

«ACE                             7, 

1 

Figure   ii.  Weekly  Clerk's  Sales  Report 


PAY  ROLL  STATISTICS  49 

checked  by  the  superintendent,  or  general  manager,  at  fre- 
quent intervals,  against  the  standard  set  at  the  beginning  of 
the  season. 

Strengthening  the  Weak  Places 

Having  now  detected  the  departments  which  have  fallen 
below  the  results  of  the  previous  year  or  the  standards  set,  the 
next  step  will  be  to  locate  the  cause,  especially  as  it  may  be 
associated  with  the  inefficiency  of  the  salespeople.  At  the 
close  of  each  week,  the  auditing  department  will  enter,  on  the 
form  illustrated  by  Figure  11,  the  sales  for  the  week  for  each 
individual  salesperson,  using  a  separate  sheet  for  each  depart- 
ment. These  sheets  are  then  passed  to  the  Pay  Roll  Clerk 
who  will  enter  the  salary  paid  to  each  for  the  week,  after 
which  the  percentage  for  each  clerk  is  calculated. 

Clerk's  Percentages 

The  Slide  Rule  makes  it  possible  to  complete  the  calcula- 
tions of  the  percentages  for  all  the  clerks  in  the  average  sized 
department  store  in  less  than  an  hour.  The  setting  of  the 
rule  for  these  calculations  requires  the  same  formula  (Formula 
6)  as  described  for  making  the  calculations  on  Figures  9A 
and  9B. 

Clerk's  Standing 

The  standing  of  each  clerk  in  each  department  should  be 
placed  in  the  column  at  the  extreme  right  of  this  form.  This 
is  determined  entirely  by  the  amount  of  goods  sold.  Then  the 
names  of  the  clerks  in  each  department  are  copied  on  the 
perforated  part  at  the  left  of  the  form,  in  the  order  of  standing. 
These  reports  should  be  given  to  the  superintendent,  or  gen- 
eral manager,  not  later  than  Wednesday  evening  each  week 


NO              /OV^ 

»» 

f>f/VMF      fOX^>y^^ laxity  /riairqCL^ 

«  * 

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WEEK 
ENDED 

SELLING 
JN    DEP'T 

SALES 

WEEKLY 
SALARY 

* 

STAND- 
ING 

REMARKS 

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O 

Figure  12,  Clerk's  Individual  Sales  and  Salary  Record — Weekly  Basis 


PAY  ROLL  STATISTICS  51 

for  the  previous  week.  The  sheets  should  be  fastened 
together  in  such  a  manner  that  the  superintendent  may  easily 
detach  the  left  hand  perforated  sections,  retaining  the  other 
parts  for  his  own  reference. 

Permanent  Cumulative  Records 


Before  giving  these  reports  to  the  superintendent,  the 
sales,  salary,  percentage,  and  standing  of  each  clerk  should  be 
posted  from  the  report  to  the  form  shown  in  Figure  12. 

From  this  it  is  possible  to  obtain  at  any  time  the  average 
results  of  any  clerk's  efforts  and  to  note  the  advancement  which 
is  being  made  along  the  line  of  efficiency. 

Clerk's  Records  on  Monthly  Basis 

When  weekly  results  are  not  desired,  a  slight  variation  of 
these  forms  may  be  made.  Figure  13  shows  a  modification  of 
Figure  11  so  that  it  may  be  used  for  compiling  the  salary 
statistics  monthly  instead  of  weekly.  A  column  has  been 
added  in  which  to  enter  the  number  of  days  employed  during 
the  month,  and  the  salary  column  has  been  changed  to  Weekly 
Salary. 

Accurate  Records  vs.   Usual  Method 


Under  the  ordinary  methods,  in  preparing  these  statistics 
on  a  monthly  basis,  the  calculations  are  usually  made  on  the 
basis  of  Wages  Paid  to  each  clerk,  during  the  month,  rather 
than  that  of  Wages  Earned,  and  on  account  of  about  every 
third  month  having  five  pay  days,  the  percentages  are  far  from 
accurate,  while  if  steps  are  taken  to  base  the  calculations  on  the 
Salary  Earned,  the  effort  required  is  so  great  that  there  is 
likely  to  be  much  delay  in  getting  the  report  out. 


52 


DEPARTMENT  STORE  STATISTICS 


The  method  herein  described,  makes  it  possible  to  deter- 
mine accurately,  the  selling  percentages  for  each  clerk  with 
the  minimum  labor  and  to  present  the  record  of  each  clerk's 
results  in  a  much  more  concise  and  understandable  form  than 
is  usually  employed. 


nFPT      •2'^      MONTH  OF /Vlltay/-? 

DF.PT           <?  O 

MONTH  ( 

■)F 

??i<i-Y    .     / 

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NAME 

STAKD- 
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NAME 

SALES       j     D„, 

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i 

BUYERS  WILL  POST  THIS  REPORT 

IN  DEPT.     FOR  CLERKS 

ATTENTION 

^"Ji,'-  $//^  7tv.2vr    ,^ 

1 

Figure    13,  Monthly   Clerk's  Sales  Report 


NO. 

1^ 

t^ 

1  > 

o 

NAME 

♦  » 

1 

MONTH 

SELLING 
IN    DEPT 

SALES 

DAYS 

WEEKLY 
SALARY- 

% 

STAND- 
ING 

REMARKS 

Feb. 

Mar. 

Apr. 

May 

June 

July 

o 

Aug. 

Sept. 

Oc 

Nov. 

Dec. 

Jan. 

Total 

REMARKS 

o 

Figure  14,  Clerk's  Individual  Sales  and  Salary  Record.     Monthly  Basis 


54  DEPARTMENT  STORE  STATISTICS 

How  to  Obtain  Accurate  Results 

When  the  month's  sales  have  been  audited  and  posted  to 
the  sales  abstract,  the  auditing  department  should  post  the 
sales  of  each  clerk  to  Figure  13,  using  a  separate  sheet  for  each 
department,  at  the  same  time  entering  the  number  of  days 
employed  in  the  proper  column;  the  number  of  days  employed 
is  determined  by  the  number  of  postings  to  the  monthly  sales 
abstract.  The  sheets  are  then  passed  to  the  Pay  Roll  Clerk 
who  will  verify  the  number  of  days  employed  and  enter  the 
weekly  rate  of  wages. 

Calculating  Percentages 

The  next  step  is  the  calculation  of  the  selling  percentage ; 
a  better  understanding  of  how  this  is  done  may  be  gained  by 
thfe  examination  of  a  concrete  example : — 

A  clerk  who  receives  a  weekly  wage  of  $13.00  has  been 
present  during  the  month,  23  days,  and  sold  $825.00  worth  of 
merchandise;  required  the  selling  percentage. 

The  Slide  Rule  is  set  in  the  following  manner: — 

FORMULA  No.  7 


c 


D 


Set  6  days 


Over  $13.00 


R  to  1 


1  to  R 


R  to  23 


$825.00  to  R 


Under  1 


Find  6.03% 


The  first  operation  required  is  to  find  the  average  daily 
wages;  this  is  obtained  by  setting  the  number  of  working  days 
in  a  week  over  the  weekly  wage,  the  result  being  found  on 
Scale  D,  under  1  on  Scale  C  (See  Figure  15  on  opposite  page), 
but  as  this  is  not  to  be  made  a  part  of  the  record  it  is  not 
read  off,  but  is  in  turn  multiplied  by  the  number  of  days 
present  during  the  month. 

In  the  position  in  which  the  rule  is  now  setting,  the  num- 
ber 23  on  Scale  C  does  not  coincide  with  any  point  on  Scale  D, 
hence  it  is  necessary  to  set  the  runner  at  the  right  index,  then 


f  merchandise; 


lililililililililiTiiiilMiiTiniliiiilimliilTiiiililiiTllIlM 


I 


i|'|i|i|T|i|'j'l'l'lT|i|i|'|i|i^'|i|TlflWipifWj 


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I 


A  clerk  who  receives  a  weekly  wage  of  $13.00  has  been  present  during  the  month,  23  da>'s  and  has  sold  $825.00  worth  of  merchandise; 
required  the  selling  percentage. 

(See  Formula  on  page  54) 


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Figure   IS.  Fini  Position 


C 6        Rnt 

D       \      13      \ 


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C        I       R  10  23 


liiiyifw#fl#f^^ 


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t-igurc  IS.  Fourth  rosillon    —  — 

»        I  I  Finil  6.0S% 


PAY  ROLL  STATISTICS  55 

leaving  it  in  this  position,  move  the  slide  to  the  right  until  the 
left  index  coincides  with  the  runner  (See  Figure  16)  ;  then 
by  moving  the  runner  to  23  (See  Figure  17)  on  Scale  C,  we 
find  on  Scale  D  the  total  wages  earned  during  the  month. 
This  is  now  divided  by  the  total  sales  for  the  month  which 
is  done  by  placing  $825.00  on  Scale  C  to  coincide  with  the 
point  indicated  by  the  runner  on  Scale  D,  the  result  being 
found  on  Scale  D  under  the  right  index  on  Scale  C  (See 
Figure  18). 

The  average  time  required  to  perform  these  operations  is 
less  than  30  seconds  for  each  problem,  making  the  time 
required  for  an  entire  force  of  250  clerks  about  2  hours. 

Permanent  Record  of  Monthly  Results 

Figure  14  is  a  variation  of  Figure  12,  modified  so  that  it 
can  be  used  in  connection  with  Figure  13.  This  brings  the 
results  of  a  salesperson's  efforts  for  an  entire  year  together  on 
one  page  and  is  a  very  convenient  and  satisfactory  form  of 
record. 

Wage  Records  on  General  Books 

What  has  been  said  before  in  regard  to  inaccuracies 
brought  about  by  wage  calculations  being  made  on  the  basis 
of  'Svages  paid"  rather  than  "wages  earned"  in  dealing  with 
the  individual  salespeople,  applies  equally  as  well  to  the  total 
pay  roll  figures  by  departments,  to  be  incorporated  in  the  entry 
at  the  close  of  the  month,  charging  the  several  accounts  in  the 
general  ledger.  As  every  third  month  contains  5  pays,  and 
as  the  corresponding  month  a  year  ago  may  have  contained 
but  4,  the  comparative  percentages  are  of  little  value  unless 
the  charge  is  made  on  the  basis  of  wages  earned,  not  on  the 
amount  paid. 


k 


56  DEPARTMENT  STORE  STATISTICS 

To  Determine  Wages  Earned 

The  approximate  amount  of  wages  earned  by  the  em- 
ployees in  each  and  all  departments,  every  month,  regardless 
of  the  amount  paid,  may  be  readily  obtained  in  the  manner 
illustrated  by  Figure  19.     Divide  a  sheet  of  columnar  paper 


Figure   ig.  Monthly  Distribution   of  Department  Salary 

into  sections, — one  for  each  department;  post  to  this  the  wages 
paid  for  each  during  the  month,  then  foot  and  balance  the 
sheet  with  the  total  amount  of  pay  roll  for  the  month. 

If  there  has  been  four  pay  days  there  will  be  24  days' 
wages  represented  on  this  sheet,  while  if  there  has  been  five, 
there  will  be  30  days.  Then,  to  ascertain  the  number  of  days  to 
be  charged  to  the  month,  deduct  the  number  of  Sundays  in  the 
month  from  the  total  number  of  days  in  the  month;  if  the 
month  contained  30  days  and  there  were  S  Sundays,  the  num- 
ber of  days  to  be  charged  for  will  be  25. 

Assuming  that  there  has  been  four  pays,  and  that  in  the 
month  under  consideration  there  were  25  working  days;  by 
ordinary  arithmetic  we  would  find  the  approximate  amount  of 
wages  earned  by  the  employees  in  each  department,  by  divid- 
ing the  total  wages  paid  by  24  and  multiplying  the  result  by 


PAY  ROLL  STATISTICS  57 

25,  or  taking  25-24  of  the  amount  paid.     With  the  Slide  Rule 
this  resolves  itself  into  the  proportion, 

24  :  25  ::  Salary  Paid  :  Salary  Earned, 
and  the  Slide  Rule  is  set  according  to  Formula  8. 

FORMULA  No.  8 


c 

Set  days  paid 

Under  salary  paid 

D 

Over  days  worked 

Find  salary  earned 

Inaugurating  Accurate  Methods 

In  order  to  inaugurate  this  method  of  accounting,  it  is 
necessary — 

1.  To  determine  at  the  last  of  some  month,  the  amount  of 
wages  unpaid  at  that  time,  and  to  make  a  journal  entry 
charging  the  departments  and  crediting  Pay  Roll.  The 
account  "Pay  Roll"  will  then  show  on  the  balance  sheet  as 
a  current  liability. 

2.  Charge  all  Pay  Roll  checks  issued  during  the  month  to 
Pay  Roll  account,  and  at  the  end  of  that  and  each  suc- 
ceeding month,  prepare  as  shown  by  Figure  19,  an  ab- 
stract which  forms  the  basis  for  the  journal  entry  charg- 
ing the  departments  and  crediting  Pay  Roll. 

In  this  way  the  comparative  percentages  from  month  to 
month  will  not  be  subject  to  the  fluctuations  encountered 
under  ordinary  methods. 

Adjustments  Necessary 

On  account  of  these  results  being  approximated,  it  will 
be  necessary  to  adjust  the  balance  of  unpaid  wages  from  time 
to  time.  While  the  variation  is  slight,  it  should  not  be 
allowed  to  accumulate.  The  best  time  to  make  these  adjust- 
ments is  at  the  end  of  those  calendar  months  on  which  all 
wages  earned  have  been  paid,  at  which  time  the  entry  should 


58  DEPARTMENT  STORE  STATISTICS 

be  SO  adjusted  that  nothing  will  be  left  on  the  Pay  Roll 
account. 

How  to  Make  Adjustments 

When  this  adjustment  is  made,  the  abstract  shown  as 
Figure  19  is  prepared  in  the  usual  manner,  but  before  the 
subsequent  journal  entry  is  made,  its  effect  upon  the  Pay  Roll 
account  should  be  noted,  care  being  taken  to  observe  whether 
the  difference  would  be  a  "debit"  or  a  "credit"  balance.  This 
difference  should  then  be  prorated  among  the  departments 
on  the  basis  of  the  amount  already  distributed.  The  prorat- 
ing is  done  in  the  following  manner: — 

FORMULA  No.  9 


D 


Grand  Total  of 
Set — Amounts  Distributed 


Over — Difference  to  be 
Prorated 


Under — Salary  charged 


Find — Proportional  amount  to  be 

(a)  added  or 

(b)  deducted 


a,  If  Pay  Roll  Account  would  show  debit  balance. 

b,  If  Pay  Roll  Account  would  show  credit  balance. 


CHAPTER  VI 

CALCULATING  MARK-UP  AND  %  MARK-UP 

THE  successful  merchant  is  deeply  concerned  with  those 
things  which  influence  the  turnover  of  his  stocks  and 
with  the  rate  percent  of  gross  profit  which  he  realizes. 
Quick  turnover  is  the  moneymaking  principle,  and  experience 
has  taught  that  there  is  great  danger  of  retarding  the  rate  of 
turnover  by  marking  the  goods  in  the  beginning,  too  high. 

Danger  of  Excessive  Mark-Up 

In  the  eagerness  to  increase  the  profits,  there  is  a  tendency 
to  mark  more  than  fair  profit  on  goods  when  they  are  bought, 
unless  there  is  a  record  kept  which  will  serve  as  a  guide  in 
governing  the  original  Mark-Up. 

Selling  Prices  Recorded  on  Invoices 

To  this  end,  each  buyer  should  be  required  to  mark  on  all 
invoices  as  they  are  checked,  the  prices  at  which  each  article 
is  to  be  sold.      (Figure  20) . 

In  the  office,  then,  extensions  are  made  at  these  prices 
and  a  footing  taken  of  these  amounts  so  that  when  the  invoice 
passes  the  general  manager  it  shows,  in  addition  to  the  COST 
amount,  the  RETAIL  amount  which  will  be  realized  from  the 
sale  of  the  goods  if  sold  at  its  original  marked  price. 

Auditing  Invoices 

Auditing  the  cost  extensions  and  making  the  retail  exten- 
sions are  matters  which  require  greater  accuracy  than  would 


CALCULATING   MARK-UP  61 

be  possible  to  obtain  on  the  Slide  Rule.  A  key-driven  adding 
machine  is  the  usual  mechanical  means  employed  for  making 
these  calculations,  but  the  Slide  Rule  is  the  most  rapid  and 
satisfactory  means  of  calculating  the  percent  of  Mark-Up 
when  the  cost  and  retail  amounts  have  been  obtained. 

Retail  Extensions  Should  be  Made  in  Red 

The  retail  extensions  should  be  made  with  red  ink  or 
with  a  color,  not  likely  to  be  used  by  a  wholesaler  in  making 
out  bills.  Pencil  figures  should  be  avoided  and  unless  ink 
of  some  odd  color  is  used  there  is  great  danger,  when  paying 
the  bill  to  pay  the  retail  amount  instead  of  the  cost  amount. 

Calculating  Percent  of  Mark-Up 

With  the  COST  and  RETAIL  amounts  shown  on  Figure  20, 
the  percent  of  Mark-Up  was  obtained  in  the  following 
manner: 


FORMULA  No.  10 

c 

Set  Retail  Amount 

Under  1 

D 

Over  Profit  Marked 

Find  Percent  of  Mark-Up 
Illustration: 

C 

Set      $282.19 

Under  1 

D 

Over  $83.13 

Find  29.46% 

This  gives  the  percentage  to  three  places,  beyond  which 
it  has  no  practical  value  in  merchandising  statistics.  It  is 
easily  possible  for  an  operator  to  acquire  a  speed  of  from  8 
to  10  such  operations  in  a  minute;  even  at  the  rate  of  5  a 
minute,  this  percentage  can  be  calculated  on  150  invoices  in 
30  minutes. 


c 

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100   .50 

Figure  21,  Comparison  of  Percent  of  Profit  Based  on  Cost  with  Same 

Based  on  Retail 


CALCULATING  MARK-UP  ,  63 

Percentage   Cards  for  Buyers 

As  a  guide  in  establishing  the  prices  at  which  merchan- 
dise is  to  be  sold,  the  buyers  in  some  stores  are  furnished 
with  cards  as  shown  by  Figure  21.  On  these  cards  the  rela- 
tion between  the  percent  of  Mark-Up  on  the  COST  and  the 
percent  of  Mark-Up  on  the  RETAIL  is  shown  in  parallel  ver- 
tical columns.  On  this  we  see  that  if  we  add  for  profit  an 
amount  equal  to  25%  of  the  COST  we  will  realize  a  profit  of 
only  20%  OF  THE  SALES  if  the  goods  are  sold  as  originally 
marked.     So  also, 

33  1-3%  of  the  Cost  equals  25.  %  of  the  Retail 
40  %  of  the  Cost  equals  28.57%  of  the  Retail 
43  %  of  the  Cost  equals  30.07%  of  the  Retail 
82       %  of  the  Cost  equals  45.05%  of  the  Retail 

Percentage   Card  Used  in   Connection  with   the  Slide  Rule 

The  Slide  Rule  may  be  used  very  advantageously  in  con- 
nection with  such  a  card  in  establishing  the  retail  prices  for 
new  goods.  If  the  standard  for  "orginal  Mark-Up"  is  set  at 
28.5%  of  the  retail^  we  find  by  referring  to  the  card  that  this 
is  equivalent  to  40%  of  the  COST.  Thus  we  have  the  propor- 
tion, 28>^%  :  40%  : :  Cost  :  Selling.     On  the  rule  we  then  set: 


Desired  percent 
Set — at  selling 


FORMULA  No.  11 


Under — Cost 


Over — Corresponding 


Find — Required 


percent  at  cost  Selling  Price 

With  the  rule  set  in  this  position,  we  find  that 

An  article  costing  $2.00  should  be  marked  $2.80 
An  article  costing  1.50  should  be  marked  2.10 
An  article  costing  1.40  should  be  marked  1.96 
An  article  costing      .30  should  be  marked      .42 


PURCHASES 
Month  Ended  January  31,  1911. 

DEPT. 

AMOUNT 
COST                            RETAIL 

% 

MARKED             ST'd. 

1 
2 
3 

4 
5 
6 

7 
8 
9 

10 
11 
12 

13 
14 
15 

16 
17 
18 

230.67                364.10 

406.49  602.50 
33.31                   66.38 

585.50  932.75 
453.83                 687.04 

1,498.56             2,235.85 

295.98                436.07 

1,701.07              2,513.11 

187.06                246.00 

877.41              1,383.42 
399.45                909.83 
346.83                621.79 

980.95              1,374.22 
512.62                901.89 
359.80                447.90 

346.22                540.61 

2.35                    7.86 

253.67                392.26 

36.6              35 
32.6              33 

50.1  40 

37.2  35 

34.1  33 
33.0             33 

32.2  33 

32.3  33 
23.9             30 

37.0  37/2 

56.1  45 
44.3              45 

28.6  33 

43.2  45 

19.7  25 

35.9              33 
78.7              50 

35.3  33 

1 — ' ^           ^''^ ^^ 

^ —     -""-y..,^-^ 

Total 

31,651.40             51,545.94 

38.6              37/ 

Figure  22,  Purchase  Report  Showing  Percent  of  Mark-Vp  Maintained 


CALCULATING  MARK-UP  65 

Another  Method — Without   Card 

When  the  relative  percent  on  Cost  and  Selling  Prices  is 
not  known,  the  following  formula  will  give  the  same  results : — 


FORMULA  No.  12 


100%— Desired  % 
Set — Mark-Up   (Selling) 


Over — 1 


Under  Cost  Price 


Find  Selling  Price 


Do  Not  Mark  According  to  Set  Standard 

It  is  not  to  be  taken  from  this  that  all  merchandise  in  a 
department  is  to  be  marked  according  to  a  set  standard,  for 
nothing  could  do  greater  harm.  The  slowest  moving  goods 
should  be  marked  with  the  widest  margin  of  profit  and  that 
which  will  turn  in  a  few  weeks,  at  the  narrowest,  but  the 
average  of  all  should  meet  the  general  average.  In  a  depart- 
ment doing  an  annual  business  of  $100,000.00,  the  goods  sold 
might  be  classified  as  follows : 

$50,000  which  will  turn  in  from  1  to  2  mos.  at  28^%  profit 
25,000  which  will  turn  in  from  3  to  6  mos.  at  35  %  profit 
25,000  which  will  turn  in  from  6  to  12  mos.  at  40     %  profit 

At  this  rate  the  average  profit  on  all  lines  would  be  30.5%  or 

approximately  30%. 

Periodical  Reports  on  Mark-Up 

We  see  from  this  that  a  single  invoice  is  not  a  criterion, 
therefore  the  manager  must  be  furnished  with  reports  from 
time  to  time  showing  the  average  marked  by  each  depart- 
ment. (Figure  22).  These  reports  may  be  furnished  either 
daily,  weekly,  or  monthly,  according  to  the  requirements  of 
the  business.  In  preparing  reports  of  this  character,  the 
Slide  Rule  is  used  to  calculate  the  percentages. 


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CALCULATING   MARK-UP  67 

Purchase  Record — Columnar 


These  reports  are  made  possible  only  by  proper  form  of 
Purchase  Record,  which,  as  will  be  seen  by  Figure  23,  may 
be  obtained  by  making  only  a  slight  variation  in  the  ordinary 
columnar  record  so  common  in  department  stores.  It  will 
be  seen  that  the  only  change  necessary  to  get  a  permanent 
record  of  the  Mark-Up  on  each  invoice  is  to  add  another 
column  for  each  department,  into  which  to  place  the  Retail 
Value  of  each  invoice  entered.  In  order  not  to  confuse  the 
entries  made  on  this  record,  some  firms  adopt  the  plan  of 
entering  the  retail  in  red  ink. 

Purchase  Record — Unit  System 

As  stores  grow  from  small  to  large  ones  and  from  large 
to  larger  ones,  constantly  adding  new  departments,  there  is 
a  need  felt  for  a  Purchase  Distribution  that  will  be  elastic 
enough  to  allow  for  this  expansion  without  the  necessity  of 
providing  correspondingly  larger  forms.  Figure  24  illus- 
trates a  form  admirably  adapted  to  this  purpose. 

These  forms  are  used  in  a  sectional  post  binder  having 
division  tabs,  one  for  each  department.  All  invoices  for 
department  "  1  "  are  entered  in  section  "  1,"  etc.  With  this 
form  it  is  possible  to  care  for  a  new  department  which  may 
be  added  at  any  time  by  merely  opening  a  new  section. 

The  Stock  Ledger 

At  the  close  of  each  week,  the  total  amount  charged  to 
each  Department  at  COST  and  RETAIL  is  carried  to  the  Mer- 
chandise Stock  Ledger,  (Figure  25),  where  again  there  is 
use  for  the  Slide  Rule  in  calculating  the  average  percent  of 
profit  marked  for  the  season.  When  the  amounts  for  the 
current  week  have  been  posted  and  footed,   the  percent  of 


68 


DEPARTMENT  STORE  STATISTICS 


PURCHASES 

FOR  THE  MOMTH  OP Q— i.>foe/ 


DEPARTMENT 


'^ 


Figure  24,  Purchase  Record — Unit  Syste/n    (Left  Hand  Page) 

profit  realizable  as  indicated  by  these  amounts  must  be  calcu- 
lated, so  that  the  Stock  Ledger  shows  at  all  times  (1)  the 
percent  of  profit  marked  on  each  week's  purchases,  and  (2) 
the  average  maintained  for  the  season,  including  the  inventory 
at  the  beginning. 

Calculating  Season  Mark-Up 

There  is  some  dii^ference  of  opinion  as  to  how  the  average 
Mark-Up  for  a  period  shall  be  figured.  Some  advance  the 
idea  of  deducting  the  Reductions  at  Selling  Price  from  the 
original  Retail  Value  charged  to  the  department,  thus  cor- 
recting the  average  percent  of  Mark-Up  from  the  beginning 
of  the  period  to  that  date.  The  following  statement  may  aid 
in  getting  a  clearer  understanding  of  this  principle: 


CALCULATING  MARK-UP 


69 


PURCHASES 

45 

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COST  RETAIL  % 

Inventory  Feb.    1 $15,000.00        $22,500.00        33  1-3% 


Purchases  Feb. 


3,000.00 


4,500.00        33  1-3% 


Total   $18,000.00        $27,000.00        33  1-3% 

Reductions  —  Feb 500.00 


Total $18,000.00        $26,500.00        32.0     % 

Objection  to   This  Plan 

It  matters  not  if  this  plan  or  the  one  described  later  is 
adopted,  the  Stock  Balance  at  Retail  will  be  the  same.  But 
the  Stock  Balance  is  only  one  object  in  the  keeping  of  the 
Merchandise  Stock  Ledger,  the  other,  which  would  seem  to 
be  a  much  more  important  one,  being  to  provide  a  means  of 
determining,  as  accurately  as  possible,  the  profits. 




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CALCULATING  MARK-UP  71 

Reason  for  the  Objection  Illustrated 

In  order  to  illustrate  the  weakness  of  this  plan,  we 
will  take  an  extreme  case.  Assuming  that  during  the  month 
of  February,  the  sales  amounted  to  $1,000.00  and  the  reduc- 
tions $500.00.  From  the  fact  that  the  original  Mark-Up  on 
Stock  and  Purchases  to  end  of  February  was  33  1-3%,  it  will 
be  seen  that  the  merchandise  sold  during  February  was  at 
absolute  cost.  But  by  the  plan  being  just  described^  the  gross 
profit  is  calculated  on  the  basis  of  the  percent  of  Mark-Up 
obtained  after  deducting  Retail  Reductions  from  Total 
Retail  Stock  and  Purchases.  This,  in  the  example  illustrated, 
being  32%,  the  gross  profit  for  the  month  of  February  would 
be  estimated  at  $320.00,  which  may  be  seen,  from  the  condi- 
tions stated,  is  impossible. 

A  More  Accurate  Plan 


Greater  accuracy  is  made  possible  by  dealing  with  the 
Reductions  in  connection  with  the  SALES  rather  than  in  con- 
nection with  the  PURCHASES.  When  this  is  done,  the  calcula- 
tions are  made  on  the  basis  of  the  original  percent  of 
Mark-Up  (cumulative)  instead  of  the  corrected  percent  of 
Mark-Up  (cumulative)  after  deducting  reductions. 

Plan  Illustrated 


Taking  again  the  same  concrete  example  just  illustrated. 
The  sales  amounting  to  $1,000.00  and  the  reductions 
to  $500.00;  we  find  that,  had  the  same  goods  been  sold  with- 
out any  reductions,  the  sales  would  have  been  $1,500.00.  As 
it  was,  merchandise  originally  valued  at  $1,500.00  (Retail) 
was  taken  out  of  stock,  the  revenue  for  same  being  only 
$1,000.00. 


12  DEPARTMENT  STORE  STATISTICS 

Sales,  February $1,000.00     $1,000.00 

Reductions,  February 500.00 


Original  Retail  Value  of  Goods  Sold.  .  ..$1,500.00 
Deduct  Average  %  Mark-Up— 33  1-3% .      500.00 


Cost  of  Goods  Sold $1,000.00 


Gross  Profit $0,000.00 

Tnis  method  insures  reasonable  accuracy.  The  gross 
profits  will  fluctuate  at  all  times  in  inverse  proportion  to  the 
reductions.  Only  the  fact  that  the  goods  sold  during  the 
month  may  have  borne  a  higher  or  lower  percent  than  the 
average  shown  on  the  Stock  Ledger  stands  in  the  way  of 
absolute  accuracy. 

Another  Advantage  of  the  Stock  Ledger 

It  is  reasonably  possible  that  under  ordinary  circum- 
stances, the  kind  of  merchandise  which  is  sold  during  a  period 
will  be  repurchased  during  that  period.  It  follows,  then, 
that  if  a  department  sells  only  that  class  of  goods  on  which 
the  Mark-Up  is  less  than  the  average  shown  on  the  Stock. 
Ledger,  that  the  new  purchases  during  the  same  period  will" 
consequently  show  less  Mark-Up  than  the  average,  so  that 
the  Stock  Ledger  is,  in  a  way,  a  barometer  as  to  the  kind  of 
merchandise  which  is  being  sold. 


CHAPTER  VII 

TAKING  THE  INVENTORY 

OF  the  records  kept  by  the  retail  store  there  is,  perhaps, 
no  other  that  is  of  as  much  importance  to  the  mer- 
chant, or  one  that  can  give  more  valuable  information 
than  a  properly  handled  and  carefully  taken  inventory.  It 
has  not  been  long  since  the  inventory  was  looked  upon  by 
many  merchants  as  a  sort  of  necessary  evil  and  was  taken  in 
the  regular  routine  of  business,  only  as  a  summing  up  that  was 
necessary  to  arrive  at  the  amount  of  merchandise  on  hand,  to 
use  in  making  the  closing  entries  on  the  books  at  the  end  of 
the  fiscal  year.  Beyond  this,  the  merchant  never  expected  to 
derive  any  good  from  the  work.  Under  these  conditions,  the 
inventories  were  allowed  to  drag  along  for  weeks  before  the 
final  closing.  Such  an  inventory  gave  anything  but  accurate 
results.  There  are  stores  today,  whose  inventories  show  a 
total  running  up  into  the  millions,  where  the  listing  of  all 
stock  is  completed  in  a  single  day's  time,  and  within  two  days 
from  the  completion  of  the  listing,  the  final  figures  are  ready 
to  be  incorporated  in  the  closing  entries  of  the  year's  business. 
In  addition  to  having  the  stock  listed  accurately  and 
quickly  there  are  some  other  essentials  which  should  not  be 
overlooked. 

Relative  Age  of  Merchandise 

Almost  every  merchant  today  is  indicating  on  the  price 
ticket,  either  by  letter  or  other  character,  a  mark  to  indicate 
the  time  during  which  each  article  of  merchandise  was  placed 


74  DEPARTMENT  STORE  STATISTICS 

in  stock.  Where  the  letter  is  used,  it  is  usually  prefixed  either 
to  the  cost  or  selling  price  on  the  price  tag.  These  letters  are 
usually  changed  every  six  months  or  every  year,  and  when 
this  plan  is  adopted  it  is  a  very  easy  matter  to  determine  the 
age  of  any  article  of  merchandise  merely  by  referring  to  the 
price  tag. 

If  the  form  of  inventory  sheet  adopted  is  provided  with 
a  special  column  as  indicated  by  the  column  headed  "Letter" 
on  the  form  here  shown,  Figure  26,  it  is  a  very  simple  matter 
to  enter  in  this  column,  the  letter  shown  on  the  price  ticket  of 
each  article  of  merchandise  listed  in  the  inventory,  and  the 
management  will  then  be  able  to  satisfactorily  determine  the 
proportion  of  old  to  new  stock  in  any  or  all  departments. 

Subdivisions  of  Stock 

It  will  be  found  very  desirable  to  classify  the  stock  in 
each  department  into  as  many  subdivisions  as  possible,  instead 
of  jumbling  it  together  as  is  sometimes  done.  In  the  Cloth- 
ing Department  we  might  have  such  subheadings  or  sub- 
divisions as:  Men's  Clothing,  Boys'  Clothing,  Men's  Over- 
coats, Boys'  Overcoats,  Men's  Pants,  Boys'  Pants;  and  each 
subdivision  may  be  again  divided  according  to  the  general 
character  of  the  merchandise  contained  in  each,  either  accord- 
ing to  the  color,  style,  or  general  utility.  In  order  that  this 
may  be  done  advantageously  the  merchandise  should  all  be 
carefully  arranged  and  assorted  before  the  listing  is  begun. 

Cost  and  Selling  Prices 

Some  of  the  larger  stores  have  adopted  a  method  of  in- 
ventorying at  selling  price  only,  while  others  are  following  the 
plan  of  inventorying  at  both  cost  and  selling  prices.  The 
medium  sized  and  smaller  stores  have  been  adhering  to  the 


TAKING  THE  INVENTORY  75 

plan  of  inventorying  at  original  cost  or  market  value  (cost). 
The  advantage  to  be  gained  by  taking  an  inventory  at  Cost 
and  Selling  Prices  is  readily  seen.  There  will  be  a  surprise  in 
store  for  most  merchants  who  have  never  taken  an  inventory 
in  this  manner.  The  difiference  between  the  percent  of  profit 
marked  on  the  merchandise  as  shown  by  the  inventory  sheet 
and  the  percent  of  profit  realized  from  the  operation  of  the 
various  departments,  will,  in  some  instances  be  very  great. 
The  plan  is,  however,  not  intended  so  much  to  show  the  mer- 
chant how  well  he  has  been  doing  as  to  show  him  where  he 
should  do  better,  and  if  it  serves  this  purpose  well  the  concern 
who  adopts  this  plan  will  be  amply  repaid  for  any  additional 
effort  required  to  take  the  stock  in  this  way. 

Form  of  Inventory  Sheet 

Taking  an  inventory  at  Cost  and  Selling  Prices  is  greatly 
facilitated  by  using  the  correct  form  of  Inventory  Sheet, — 
one  provided  with  spaces  in  which  to  enter  the  cost  and  sell- 
ing price  of  each  article  listed,  and  for  making  a  record  of 
any  reductions  in  the  prices,  taken  at  the  time  of  listing  the 
stock.     Such  a  form  is  illustrated  by  Figure  26. 

Preparatory  Work 

Before  the  date  set  to  begin  listing  the  stock  the  mer- 
chandise should  all  be  carefully  arranged  and  classified.  All 
goods  that  cannot  be  listed  as  units  should  be  measured  or 
counted  and  a  memorandum  showing  the  quantity  should  be 
attached  to  each  piece  of  goods,  or  to  each  package.  These 
memorandums  may  be  prepared  by  cutting  a  piece  of  ordinary 
wrapping  paper  into  suitable  strips.  While  this  is  being 
done  in  the  department,  the  office  should  prepare  the  sheets 
upon  which  the  stocks  are  to  be  listed.     The  sheets  should  be 


76 


DEPARTMENT  STORE  STATISTICS 


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dated  and  those  for  each  department  should  be  consecutively 
numbered  and  have  the  department  marked  plainly  thereon; 
the  sheets  for  each  department  should  then  be  securely 
fastened  together  and  filed  away  until  ready  to  be  used  to 
list  the  stock. 


TAKING  THE  INVENTORY  11 

Goods  .Sold  After  Counting  hut  Before  Listing 

It  frequently  happens  that  after  goods  have  been  counted 
and  measured,  certain  items  are  sold.  All  the  clerks  should 
be  carefully  instructed  to  change  the  quantity  indicated  on 
any  of  the  memorandums  which  may  be  attached  to  any  piece 
of  goods  or  a  package  from  which  they  make  a  sale,  //  a  mem- 
orandum is  attached. 

Listing  the  Stocks 

When  a  department  is  ready  to  begin  listing  its  stock,  it 
will  secure  the  sheets  from  the  main  office,  where  a  record  of 
the  time  at  which  the  listing  in  each  department  is  begun, 
should  be  kept.  The  head  of  the  department  or  other  com- 
petent person  should  go  through  the  stock  calling  off  each 
item  in  its  order  to  be  listed  by  an  assistant  on  the  inventory 
sheet.  It  is  important  that  the  person  making  the  entries 
should  call  back  each  item  listed  in  order  that  there  may  be 
no  mistakes  in  the  quantities  and  prices.  In  addition  to  list- 
ing the  quantities  and  prices,  the  party  entering  should  be 
very  careful  to  get  the  correct  season  letter.  The  form  of 
inventory  sheet.  Form  26,  shown  here  provides  a  column  in 
which  to  enter  the  prices  before  inventory  and  prices  after 
inventory.  When  the  prices  before  inventory  are  not 
reduced,  it  will  not  be  necessary  to  make  any  entries  in  the 
"price  after  inventory"  columns.  When  the  price  of  an 
article  is  reduced,  the  price  before  inventory  should  be  entered 
in  the  first  column  and  the  reduced  price  entered  in  the  "price 
after  inventory  colum.n;"  the  prices  on  the  price  tickets  should 
then  be  changed  to  correspond.  Reductions  in  prices  should 
be  made  only  at  the  time  of  listing,  and  not  at  the  time  of 
counting  the  merchandise.  If,  however,  during  the  process 
of  counting,  certain  items  are  located  which  should  be  reduced, 


78  DEPARTMENT  STORE  STATISTICS 

these  may  be  placed  together  to  be  later  taken  up  specially  by 
the  department  head. 

Listed  Goods  Sold  While  Listing 

If  the  listing  is  done  while  the  store  is  in  operation,  it 
frequently  happens  that  some  articles  may  be  sold  after  they 
have  been  listed  on  the  inventory  sheet,  and  before  the  listing 
is  completed.  In  such  instances  it  will  be  necessary  to  keep  a 
list  of  all  such  items  sold  at  both  cost  and  selling  values,  and 
that  this  list  be  turned  into  the  office  with  the  inventory  sheets 
in  order  that  the  amount  so  sold  may  be  computed  and 
deducted  from  the  amount  of  stock  listed.  See  entry  on  Form 
27.  A  convenient  form  upon  which  to  list  such  articles  may 
be  prepared  by  taking  an  extra  inventory  sheet  and  writing 
plainly  across  the  top  "Listed  Goods  Sold  While  Listing." 

In  the  Ojfice 

As  soon  as  each  department  has  finished  listing  its  stock, 
the  department  manager  should  sign  under  the  last  entry 
made  on  the  last  sheet  used,  as  illustrated  by  Figure  26,  show- 
ing the  date  on  which  the  listing  was  closed.  These  sheets 
should  then  be  sent  to  the  office  to  be  extended,  examined, 
footed,  and  recapped. 

Eixtending 

The  extensions  should  be  made  at  the  prices  entered  in 
the  "before  inventory"  columns  when  the  prices  have  not 
been  changed.  See  items  No.  1,  No.  2,  and  No.  5,  on  Figure 
26.  When  the  price  has  been  changed,  the  extensions  should 
be  made  at  the  reduced  price  or  at  the  price  entered  in  the 
"after  inventory"  column,  shown  on  Figure  26.  See  items 
No.  3  and  No.  4.     Whenever  the  after  inventory  column  is 


TAKING  THE  INVENTORY 


79 


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used,  an  additional  extension  must  be  made  into  the  reduc- 
tion columns;  this  is  done  by  extending  the  difference  be- 
tween the  price  before  inventory  and  the  price  after  inventory 

Recapitulation 

When  the  extensions  have  been  made  and  examined,  the 
inventory  sheets  should  be  footed.     Each    page    should    be 


80  DEPARTMENT  STORE  STATISTICS 

footed  independently,  not  carried  forward  in  the  ordinary 
way,  and  the  total  of  each  page  should  be  recapitulated  on  a 
separate  sheet;  see  Figure  27. 

The  items  listed  on  each  sheet  should  be  footed  according 
to  season  and  a  memorandum  of  the  amount  belonging  to  each 
season  should  be  made  on  the  sheet,  see  Figure  26.  When  a 
department  has  been  completed,  the  total  amount  on  hand 
from  each  ''season"  should  be  ascertained  and  entered  on  the 
department  recapitulation  sheet.  If  the  stocks  have  been 
subdivided  in  such  a  manner  that  it  is  possible  to  ascertain  the 
amount  of  each  class  of  merchandise  on  hand  in  each  depart- 
ment, a  memorandum  of  this  should  also  be  made  on  the 
department  recapitulation  sheet;  see  Figure  27. 

Goods  Placed  in  Stock  from  Time  Listing  Closed  Until  End 
of  Fiscal  Year 

A  careful  record  should  be  made  of  all  invoices  that  are 
passed  for  goods  placed  in  stock  from  the  time  the  listing 
closed  until  the  end  of  the  fiscal  year.  If  it  were  always 
practical  to  list  the  stocks  in  all  departments  on  the  last  day 
of  the  year  this  operation  would  not  be  necessary.  If  the 
office  is  careful  to  see  that  all  invoices  for  goods  placed  in 
stock  before  the  listing  is  begun,  are  properly  entered  on  the 
purchase  record  before  the  inventory  sheets  are  given  out  to 
begin  listing,  and  will  place  a  mark  on  the  purchase  record 
showing  the  last  entry  made  for  goods  placed  in  stock  before 
the  listing  was  begun,  the  matter  of  keeping  the  record  of 
goods  placed  in  stock  after  listing  will  not  require  much 
further  attention. 


TAKING  THE  INVENTORY 


81 


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Goods  Sold  From    Time  Listing   Closed   Until  the  End   of 
the  Fiscal  Year 


Figure  No.  26  shows  that  the  stock  was  closed  on  the 
evening  of  January  22nd.  The  department  sales  record  will 
show  the  amount  of  goods  sold  out  of  the  department  from 
the  morning  of  January  23rd  to  the  evening  of  January  31st. 


82  DEPARTMENT  STORE  STATISTICS 

As  indicated  on  Figure  27,  the  amount  of  such  sales  was 
$350.00.  We  find  that  on  the  stock  listed,  the  average  per- 
cent of  Mark-Up  was  37>^%.  We  therefore  deduct  37j/^% 
from  $350.00  and  enter  the  net  amount  in  the  "cost  extension" 
column  and  the  gross  amount  in  the  "retail  extension"  column. 
These  amounts  are  then  deducted  from  the  sum  of  the  stock 
on  hand  at  the  time  the  listing  closed  and  the  amount  placed 
in  stock  from  that  time  until  the  end  of  the  month.  This 
brings  the  final  figures  for  the  department  down  as  of  the 
date,  January  31,  1913. 

Final  Recapitulation 

Figure  28  illustrates  how  the  final  figures  of  each  depart- 
ment are  assembled,  showing  cost  value,  cost  reductions,  sell- 
ing value,  and  selling  reductions,  and  the  percent  of  Mark-Up 
shown  by  each  department. 

For  convenience  in  handling,  the  loose  sheets  should  be 
placed  in  "spring  back"  holders  until  after  the  final  recapitu- 
lation has  been  made.  After  the  inventory  has  been  closed, 
the  sheets  should  be  transferred  to  a  post  binder  for  permanent 
keeping.  This  binder  should  be  arranged  with  division 
sheets  to  facilitate  ready  reference  at  any  future  time. 


CHAPTER  VIII 

MERCHANDISING  STATISTICS    (PRELIMINARY) 

PREPARATORY  to  entering  a  new  season,  the  success- 
ful merchant  lays  plans  and  prepares  charts  by  which  to 
be  guided  during  the  coming  season.  A  convenient 
form  for  a  six  months'  preliminary  plan  is  illustrated  by 
Figure  29.  A  sheet  like  this  is  used  for  each  department. 
On  this  is  first  entered,  on  the  line  opposite  "  Last  Year,"  the 
following  data  taken  from  last  year's  records : 

1.  Retail  Stock,  first  of  each  month  and  close 
of  period. 

2.  Retail  Purchases,  for  each  month  and  total 
for  period. 

3.  Sales,  each  month  and  total  for  period. 

4.  Mark-Downs,  each  month  and  total  for  the 
period. 

5.  Expenses,  each  month  and  total  for  the 
period,  together  with  relative  percent  by 
months  and  for  the  period. 

It  is  on  the  basis  of  these  five  premises  that  the  prelimi- 
nary plans  for  the  ensuing  period,  this  year,  is  based. 

Expense  Determines  Requirements 

Of  these  five  premises,  expense  is  the  one  which,  to  a 
great  degree,  determines  the  necessary  volume  of  sales.  On  a 
columnar  sheet  in  the  manner  illustrated  by  Figure  30,  post 


DEP'T 


PRELIMINARY  SIX  MONTHS'  PLANS 
Period,  from J-*^.  f ,    19  it- to  ^a^U^  2^  .  ^-?/l 


RETAIL  STOCK  . 


On  Hind  u  j  tjt- 

B«ginaing  o(  Period  .*    3  3.    j  o  a 


Dnircd  It 

End  of   Period fi    I ^C ^    o   o  a  ^— 


INITIAL  MARK-UP  REQUIRED         3^     % 


MAXIMUM  STOCK  ^  2J ,  ^  a  o  .^^ 
MINIMUM  STOCK  -#  /3,  kC a  a.  — 
MARK-DOWNS  ALLOWED :? /, 


fapt. 


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Figure  2Q,  Six  Months'  Preliminary  Merchandising  Plans 


MERCHANDISING  STATISTICS  85 

the  total  expenses  for  each  of  the  departments  for  the  corres- 
ponding period  the  previous  year.  In  the  columns  at  the 
right  should  then  be  entered  under  the  respective  headings, 

1.  Percent  of  Initial  Mark-Up  Required. 

2.  Percent  of  Mark-Downs  Allowed. 

3.  Percent  of  Net  Profit  Desired. 

With  this  information  tabulated,  the  next  step  is  to 
calculate,  on  the  basis  of  Initial  Mark-Up,  the  Sales  required 
to  pay  expenses  equal  to  the  previous  year,  after  allowing 
Mark-Downs  determined  upon,  and  still  leave  the  desired 
Net  Profit. 

Calculation  Illustrated 

In  the  illustration.  Figure  30,  Department  No.  1,  having 
expense  of  $9,713.00,  maintains  an  Initial  Mark-Up  of  35%, 
is  allowed  Mark-Downs  equal  to  2%  of  the  Sales,  and  a  Net 
Profit  of  4%  is  expected.  The  ordinary  arithmetical  solution 
of  this  problem  is, 

$9,713.00  -  [35%  —  (4%  +  2%)  ]  =  $33,493.00 

With  the  Slide  Rule,  the  calculation  is  made  in  the  fol- 
lowing manner: 


FORMULA  No.  13 

Set  %Mark-Up—  (%Mark-Down  +  %Net  Profit) 


Over  Expense 


Under  1 


Find  Required  Sales 


The  setting  for  the  above  stated  problem  is, 


FORMULA  No.  14 


Cj Set   [35%  —  (4%  -f-  2%)  ]  =  29% 


Over  9,713.00 


Under  1 


Find  $33,500.00 


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MERCHANDISING  STATISTICS  87 

Required  Sales  vs.  Sales  Previous  Year 

In  order  to  judge  the  possibility  of  meeting  the  "required 
sales,"  the  sales  of  the  previous  year  for  each  department  are 
posted  beside  "Sales  Required"  as  shown  on  Figure  30,  and 
then  an  arbitrary  amount  which  is  believed  possible  to  obtain 
should  be  determined  upon  and  entered  under  the  caption, 
"Sales  Plan." 

In  the  illustration,  Figure  30,  while  the  Required  Sales 
for  Department  No.  1  are  $33,500.00,  the  sales  of  the  previous 
year  were  only  $27,763.00,  and  conditions  being  such  that  it  is 
doubtful  if  the  Required  Sales  can  be  reached,  the  arbitrary 
amount,  $30,000.00,  is  decided  upon. 

Determining  Amount  of  Stock  to   be   Carried 

The  next  step  is  to  prepare  the  table  shown  as  Figure  31, 
which  will  be  called  the  Preliminary  Stock  Plan.  The  aver- 
age stock  carried  by  each  department  during  the  last  year  is 
entered  in  the  first  column  of  this  statement,  and  under  the 
proper  heading,  the  sales  for  the  corresponding  period. 

In  the  column,  "Days  to  Sell,"  enter  the  number  of  days 
which  should  be  required  to  turn  the  stock  once ;  a  stock  which 
should  turn  three  times  a  year  should  turn  once  every  hundred 
days,  and  to  turn  four  times  a  year  should  turn  once  every 
seventy-five  days. 

Turnover  Calculations 


Making  turnover  calculations  in  the  terms  of  "days  to 
sell"  is  much  more  satisfactory  and  much  more  readily  com- 
prehended, than  w^hen  made  in  the  terms  of  "times  turned 
annually."  If  the  standard  last  year  in  a  department  was  125 
days  and  it  is  desired  to  obtain  a  more  rapid  turnover  this 


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MERCHANDISING  STATISTICS  89 

year,  it  is  much  easier  to  watch  when  we  set  the  standard  at 
110  days  than  by  attempting  to  change  the  rate  of  turnover 
from  2.4  to  2.72  turnovers  annually.  In  a  later  chapter,  the 
method  of  periodically  checking  up  the  rate  of  turnover  will 
be  further  discussed.  After  thoroughly  comprehending  the 
significance  of  the  term  "  Days  to  Sell,"  it  is  the  purpose  at  this 
point,  to  show  how  it  is  used  in  connection  with  the  sales  of 
the  previous  year  to  determine  the  amount  of  stock  which  that 
volume  of  business  justifies. 

Stock  Calculations  Illustrated 


By  ordinary  arithmetic,  these  calculations  are  somewhat 
tedious.  Assuming  that  there  were  ISO  business  days  in  the 
six  months'  period  under  consideration,  it  would  be  necessary 
first  to  divide  the  sales  for  the  period,  for  each  department, 
by  150  to  arrive  at  the  average  day's  sales,  then  multiply  the 
result  by  the  "Days  to  Sell,"  required  of  each  department. 

It  will  be  seen  that  a  problem  of  this  kind  resolves  itself 
into  the  proportion: 

Days  )    .    \  Days  Last  Stock 

in  Period  i        |  to  Sell  Year's  Sales      "      Justified 

which  for  Department  No.  1  in  the  illustration  becomes 

150  :90  ::  $27,763.00  :X=  ($16,200.00). 

The  formula  for  performing  these  calculations  on  the 
Slide  Rule  is 


FORMULA  No.  IS 


D 


Set  Days  in  Period 


Over  Days  to  Sell 


Under  Sales  for  Period 


Find  Retail  Stock  Justified 


90  DEPARTMENT  STORE  STATISTICS 

and  the  setting  for  the  calculation  of  the  "stock  justified"  for 
Department  No.  1,  in  the  illustration,  Figure  31  is 

FORMULA  No.  16 


c 

Set     150 

Under    $27,763.00 

D 

Over  90 

Find       $16,200.00 

Buyers  to  be  Consulted 

At  this  point,  the  General  Manager  should  call  the 
buyers  in,  one  by  one,  and  with  them  go  over  the  figures 
which  have  been  prepared  for  their  departments.  Sales  and 
Stock  amounts  should  be  carefully  weighed,  one  against  the 
other.  Brown,  the  buyer  for  Department  No.  1,  insists  that 
it  is  not  possible  to  sell  $33,500.00  worth  of  goods  in  the 
department  in  the  next  six  months,  and  it  would  be  poor 
policy  to  tell  him  that  he  must  agree  to  sell  this  amount. 
Brown  should  be  led  to  see  the  importance  of  increasing  the 
sales  in  his  department,  and  should  agree  to  as  much  of  an 
increase  as  he  thinks  will  be  possible. 

Brown's  present  Retail  Stock  is  $23,800.00.  (See  Pre- 
liminary Six  Months'  Plan,  Figure  29).  His  average  Retail 
Stock  for  the  period  last  year  was  $25,000.00,  while  the  Sales 
for  the  period  justified  but  $16,200.00.  (See  Figure  31). 
The  turnover  in  the  department  for  the  period  last  year  was 
unsatisfactory  and  the  profits  suffered  accordingly.  Brown 
admits  that  it  is  impossible  to  obtain  satisfactory  profits  with- 
out securing  the  proper  turnover,  and  finally  promises  that  he 
will  reduce  the  stock  to  $15,000.00  by  July  31st  Inventory, 
and  he  agrees  to  sell  $30,000.00  in  the  next  six  months' 
period.  It  is  decided  upon  that  the  department  should  be 
operated  with  an  average  stock  amounting  to  $18,000.00,  that 
it  should  never  exceed  $27,500.00  and  should  not  fall  below 


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92  DEPARTMENT  STORE  STATISTICS 

$12,500.00.  These  plans  are  then  entered  on  the  Preliminary 
Sales  Plan,  Figure,  30,  and  the  Preliminary  Stock  Plan 
Figure  31. 

Revising  the  Expense  Plan 

At  the  beginning  of  the  chapter  it  was  stated  that  the 
amount  of  a  department's  expense  determined,  to  a  great  de- 
gree, the  volume  of  its  required  sales.  So  that,  now,  as  the 
"  Sales  Plans,"  Figure  30,  may  differ  from  the  ''  Required 
Sales,"  there  must  be  an  adjustment  of  the  ''  Expense  Plan." 
If  the  department  cannot  do  enough  business  to  justify  its 
expense,  then  the  expenses  must  be  reduced  to  be  in  proportion 
to  the  volume  of  its  sales. 

Figure  32  illustrates  how  this  revision  is  made.  In  the 
first  and  second  columns,  enter  the  Required  Sales  and  the 
Sales  Plans,  respectively;  then  calculate  the  percent  of  change 
between  the  Required  Sales  and  Sales  Plan  entering  same  in 
the  third  column  under  "  Change." 

These  calculations  are  made  by  dividing  the  difference 
between  the  two  amounts  by  the  Required  Sales.  When  the 
Sales  Plan  is  less  than  Required  Sales,  the  character  minus 
( —  )  is  placed  before  the  percent  of  change,  and  the 
character  plus  (  +  )  when  the  plan  is  more. 

In  the  next  column  is  entered  the  Expenses  for  the  cor- 
responding period  last  year.  These,  according  to  the  calcula- 
tion of  Required  Sales,  Figure  30,  are  justified  on  the  basis  of 
Required  Sales  and  should  be  increased  or  decreased  in 
proportion  to  the  increase  or  decrease  in  the  Sales  Plan. 
These  amounts  are,  therefore,  now  multiplied  by  (100%  — 
Decrease  %)  or  (100%  +  Increase  %)  to  find  the  Expense 
Justified  on  the  basis  of  the  Sales  Plan. 


MERCHANDISING  STATISTICS  93 

The  formula  for  performing  these  calculations  on  the 
Slide  Rule  is 


FORMULA  No.  17 


Set  1 


Under  (100%  +  %  Increase) 


D         Over  Last  Yrs.  Expenses 
or 


C 


Set  1 


Find  Expense  Justified 
Under  (100%  —  %  Decrease) 


D 


Over  Last  Yrs.  Expenses 


Find  Expense  Justified 


For  Department  No.  1,  the  setting  is 


FORMULA  No.  18 


Set  1 


Under    (100%  —  10.5%)  =  89.5% 


D        Over  $9,713.00 

and  for  Department  No.  2 


Find  $8,700.00 


FORMULA  No.  19 


Set  1 


Under    (100  +  5.8.%)  =  105.8 


Over  $7,600.00 

Expense  Plan 


Find  $8,050.00 


The  General  Manager  should  then  review  these  figures 
and  decide  upon  the  amount  of  expense  which  will  be  allowed 
to  each  of  the  departments  for  the  coming  period.  When 
the  Expense  Justified  is  less  than  the  Expense  Last  Year,  it 
should  be  the  basis  for  the  Expense  Plan,  but  when  the 
Expenses  Last  Year  show  less  than  the  Expense  Justified,  the 
former  should  be  used.  The  principle  is,  "be  quick  to  cut 
down  expenses,  but  slow  to  put  them  up." 

The  Expense  Plan  is,  then,  as  all  other  "plans,"  an 
arbitrary  amount  which  it  is  believed  reasonably  possible  to 
attain. 


94  DEPARTMENT  STORE  STATISTICS 

Sensible  Plans,  an  Objective  Point 

In  making  these  plans,  the  amounts  decided  upon  should, 
in  all  cases  lie  within  the  limits  of  possibility.  It  isn't  always 
a  matter  of  ''how  much  you  would  like  to  sell"  so  much  as 
"the  amount  which  you  will  be  likely  to  sell." 

Location  of  the  store  determines  the  volume  of  business 
which  can  be  counted  on  and  this  in  turn  determines  the 
amount  of  stock  which  may  be  carried  in  order  to  secure  a 
proper  turnover.  Turnover  is  the  thing  which  cleans  up 
stocks  and  increases  profits.  A  merchant  in  a  town  of  5,000 
cannot  expect  to  sell  as  much  merchandise  as  the  one  in  a  city 
of  50,000,  and  his  stock  should  be  proportioned  accordingly. 

Completing  General  Preliminary  Plans 

Having  finished  the  statements  illustrated  by  Figures  30, 
31,  and  32,  it  remains  to  complete  the  information  required 
by  Figure  29.     The  plans  for 

1.  Retail  Stock  Next  Inventory, 

2.  Sales  Plan  for  Period,  and 

3.  Expense  Plan  for  Period, 

are  entered  in  the  "Total  Column"  opposite  "Plan"  in  the 
proper  division. 

Information  at  Head  of  Preliminary  Plan  Sheets 

The  Retail  Stock  at  the  beginning  of  the  period  and  the 
amount  to  which  it  is  desired  to  reduce  it  by  the  close  of  the 
period  are  entered  at  the  top  of  the  sheet,  as  well  as  the  maxi- 
mum and  minimum  stock  to  be  carried,  together  with  the 
percent  of  Initial  Mark-Up  and  the  percent  of  Mark-Downs 
allowed. 


MERCHANDISING  STATISTICS  95 

Enter  Total  Mark-Downs  Allowed 

From  the  percent  of  Total  Mark-Downs  Allowed,  posted 
at  the  top  of  the  sheets,  the  Total  Amount  of  Mark-Downs 
Allowed  for  each  department  is  calculated  and  posted  under 
"Total"  on  the  Preliminary  Plan  Sheets  opposite  "Mark- 
Down  Plan."  These  amounts  are  calculated  by  multiplying 
the  department's  Required  Sales  for  the  period  by  the  percent 
of  Mark-Downs  Allowed, 

Calculating  Purchases  Allowed 

This  done,  all  the  "Total  Plans"  for  the  period  will  have 
been  entered  except  the  Total  Purchases  allowed,  which  is  yet 
to  be  determined. 

In  the  illustration.  Figure  29,  it  will  be  seen  that  the  stock 
for  Department  No.  1  is  to  be  decreased  to  $15,000.00  by  the 
end  of  the  period,  which  means  a  reduction  of  $8,800.00,  at 
Retail.  The  Sales  Expected,  is  $30,000.00  and  the  Mark- 
Downs  Allowed,  $600.00.  So,  by  adding  Sales  and  Mark- 
Downs  and  deducting  from  this  the  "stock  reduction"  desired, 
the  Retail  Purchases  which  can  be  allowed  is  obtained. 

Thus  we  have  for  Department  No.  1, 

Sales $30,000.00 

Mark-Downs   600.00 

Total  $30,600.00 

Less  Stock  Reduction 8,800.00 

Retail  Purchases  Allowed $21,800.00 

This  is  computed  for  all  departments  and  entered  on  the 
preliminary  plan  sheets. 


96  DEPARTMENT  STORE  STATISTICS 

Monthly  Proportions 

The  next  step  is  to  calculate  the  Monthly  Proportions  for 
Purchases,  Sales,  Mark-Downs,  and  Expenses.  In  the  ordi- 
nary way  we  would  divide  this  year's  plan  by  last  year's  result 
to  find  the  ratio,  then  multiply  each  month's  result,  last  year, 
by  this  ratio  to  find  this  year's  monthly  plan. 

The  Slide  Rule  greatly  simplifies  this.  Under  the  head- 
ing, "Proportion,"  in  Chapter  II,  it  has  been  stated  that  one 
of  the  underlying  principles  of  the  Slide  Rule  is  that  no  matter 
in  what  position  the  rule  is  set,  all  numbers  on  the  slide  will 
bear  the  same  ratio  to  the  coinciding  numbers  on  the  rule. 


The  Proportions  Illustrated 

To  perform  these  calculations  on  the  Slide  Rule,  the  fol- 
lowing formula  is  used : 

FORMULA  No.  20 
Last  Yrs.  Under  Each  Month's  Results 


Set — Total  Results 


Last  Year 


D        Over— This  Yrs. 


Find  Each  Month's  Required 


Total  Plan  Results  This  Year 

and  by  setting  the  Purchases  for  Department  No.  1,  last  year, 
to  coincide  with  the  Purchase  Plan  this  year,  we  have 


FORMULA  No.  21 


C         Set  $22,300 


JO 


Under    '   fc 


SS    :     etc. 


1 

o    I     etc. 


Over  $21,800 


Find 


Sales,  Mark-Downs,  and  Expenses  are  proportioned  in 
the  same  manner. 


MERCHANDISING  STATISTICS  97 

Calculating  Monthly  Stock  Plan 

With  the  Retail  Stock  at  the  beginning  of  the  period,  and 
the  Purchase  Plan,  Sales  Plan,  and  Mark-Down  Plan,  next 
calculate  the  Stock  Plan  for  the  first  of  each  month  in  the 
period,  in  the  following  manner: 

Retail  Stock,  February  1st $23,800.00 

Purchase  Plan,  February 5,425.00 


Total  $29,225.00 

Sales  Plan,  February 4,300.00 


Difference $24,925.00 

Less:  Mark-Down  Plan,  February.  .        000.00 


Retail  Stock,  March  1st $24,925.00 

Continuing,  these  stock  balances  are  figured  to  the  end  of 
the  period,  and  entered  on  the  Preliminary  Six  Months'  Plan 
Sheets. 

Percent  of  Expense 

The  percent  of  expense  to  sales  is  then  calculated,  and 
the  results  entered  in  the  spaces  under  the  amounts  of  expense 
by  months  and  in  the  "Total"  column.  The  formula  for  per- 
forming these  calculations  is, 

FORMULA  No.  22 


c 

Set  Month's  Sales 

Under  1 

D 

Over.  Month's  Expense 

Find  %  Expense 

Buyers  Should  Be   Given   Copies  of  the  Plans 

Each  buyer  should  be  given  a  copy  of  the  Six  Months' 
Preliminary  Plan,  Figure  29,  for  the  departments  over  which 


98  DEPARTMENT  STORE  STATISTICS 

he  has  control.  Extra  carbon  copies  may  be  obtained  without 
much  additional  labor,  either  by  having  the  information  en- 
tered on  this  form,  typed,  or  by  using  a  manifolding  pen  and 
pen  carbon. 

It  might  be  said,  here,  that  one  of  the  best  known  ways 
to  develop  a  department  head  into  a  high  grade  merchant  is  to 
let  him  feel  that  he  has  a  part  in  the  planning,  thus  placing  a 
certain  amount  of  responsibility  on  his  shoulders,  and  then  to 
keep  him  posted  with  real  facts  about  his  department  so  that 
he  may  be  able  to  reach  sound,  logical  conclusions.  This  will 
encourage  him  to  break  away  from  "rule  of  thumb"  methods 
and  adopt  sound  and  sane  methods  for  operating  his  depart- 
ment. 

Posting  Actual  Results  to  Plan  Sheets 

When  the  Preliminary  Plan  Sheets  have  been  completed, 
they  should  become  the  property  of  the  General  Manager,  or 
Merchandise  Man.  At  the  close  of  each  month,  the  actual 
results  obtained  in  every  case, — Stock,  Purchases,  Sales 
Mark-Downs,  and  Expense, — should  be  entered  on  this  form 
(Figure  29)  in  the  spaces  which  have  been  provided.  In  this 
way  a  comparison  is  obtained  which  will  prove  very  helpful 
in  dealing  with  merchandising  operations. 


CHAPTER  IX 

MERCHANDISING  STATISTICS    (WEEKLY  REPORTS) 

IN  reply  to  a  question  which  has  often  been  asked,  "What 
reports  should  be  given  to  the  General  Manager  of  a  store 
in  order  that  he  may  keep  thoroughly  posted  on  Mer- 
chandising Conditions?",  it  will  be  proper  to  first  here  give  a 
list  of  such  reports  and  then  explain  how  to  prepare  them. 
The  "figure  number"  opposite  the  title  of  each  report  is  the 
index  to  the  illustration  of  the  form  of  the  report  in  this 
chapter.  All  the  weekly  reports  should  be  in  the  hands  of 
the  General  Manager  by  Wednesday  evening  following  the 
week  which  they  cover. 

For  the  General  Manager 

1.  Advance  Sales  Report Figure  33 

2.  Daily  Sales  Comparison Figure  36 

3.  Weekly  Sales  Comparison Figure  37 

4.  Weekly  Purchase  Report Figure  38 

5.  Weekly  Turnover  Report Figure  39 

For  the  Buyers 

Supplementing  the  above,  the  buyers  should  get  the  fol- 
lowing reports  which  are  explained  and  illustrated  in  this 
chapter. 

1.  Advance  Sales  Report Figure  34 

2.  Daily  Sales  Report Figure  35 

3.  Buyers'  Weekly  Report Figure  40 


100 


DEPARTMENT  STORE  STATISTICS 


ADVANCE  SALES  REPORT 

Sales  Week  Ended . 

. .  A.c^ 

^f  ...19lV 

DEPT. 

MON. 

TUES. 

WED. 

THURS. 

FRI. 

SAT. 

TOTAL 

1 

45.17 

38.16 

42.25 

47.10 

33.18 

62.35 

268.21 

2 

134.78 

113.02 

129.17 

119.62 

118.12 

200.47 

815.18 

3 

117.50 

92.10 

115.10 

96.50 

127.03 

109.95 

658.18 

4 

202.10 

236.20 

201.25 

248.25 

348.12 

461.61 

1697.53 

5 

169.12 

147.50 

163.20 

175.12 

125.15 

252.05 

1032.14 

6 

200.19 

169.70 

215.18 

189.19 

107.13 

441.61 

1322.98 

7 

84.50 

70.50 

79.25 

88.10 

62.07 

116.68 

501.10 

8 

575.18 

482.17 

615.24 

538.88 

602.50 

960.06 

3774.03 

9 

97.25 

80.13 

91.10 

102.13 

71.37 

134.46 

576.44 

10 

45.50 

46.17 

59.42 

52.12 

47.19 

114.21 

364.6! 

11 

242.17 

237.15 

1 78.00 

203.18 

257.10 

260.60 

1378.20 

12 

82.50 

75.12 

61.57 

69.25 

77.50 

101.88 

467.82 

13 

18.92 

16.35 

18.25 

19  67 

23.95 

17.89 

115.03 

14 

348.75 

339.79 

254.63 

292  10 

371.17 

319.71 

1926.15 

15 

48.50 

53.17 

44.30 

38.50 

51.50 

64.60 

300.57 

J6_^ 

_i^,9JL^ 

L^45^ 

^_il*2iL- 

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k_i2^ 

___50M^ 

^    266.3  + 

J 

r— [ 

1 — '      ' 

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Toral 

4015.32 

.1650.83 

3810.48 

3760.42 

4175.27 

5923,85 

25336.17 

__ 

■ 

Figure  JJ,  Advance  Sales  Summary  for  Merchandising  Executives 


Advance  Sales  Reports  for  General  Executives 

In  order  that  the  executive  staff  may  carefully  anticipate 
the  sales  requirements  for  each  department,  a  weekly  report 
of  sales  for  the  preceding  year,  as  shown  by  Figure  33,  should 
be  prepared  and  given  to  them  at  least  one  week  in  advance  of 
the  corresponding  week  "this"  year,  so  that  they  may  have 
ample  time  to  prepare  for  holding  up  the  standard  set. 

A  copy  of  this  report  should  be  given  to  each  of  the  exe- 
cutives, among  whom,  care  should  be  taken  to  include  the 
advertising  manager.     If  this  form  is  printed  on  "onion  skin" 


WEEKLY  REPORTS 


101 


paper  and  a  soft  carbon  used,  several  copies  may  be  made  at 
one  time  on  the  adding  machine. 

Buyers'  Advance  Sales  Reports 

Supplementing  these  reports,  the  buyers  should  also 
be  given  advance  sales  reports  for  the  preceding  year.  This 
report  is  illustrated  by  Figure  34.  Keeping  the  buyers  posted 
as  to  v^hat  is  expected  of  them,  daily,  is  an  incentive  which 
should  lead  them  to  put  forth  their  best  efforts.  The  buyers 
should  be  taught  to  use  these  reports.     For  convenience  in 


■a- 

DEPT.../ 

Keep  Your  Eye  on  This  Card 

LAST  YEAR'S  SALES 

From  Mon i?.r....  to  Sat.  ..fl?^. 

Monday ¥.5^1. ./.7 

Tuesday ♦?.i[: /.^ 

Wednesday J7f.?.,'..r^.>^ 

Thursday ^.7. .:,./.  .9. 

Friday ?.^.i.J..K..... 

Saturday ^.?.:.A.^...... 

TOTAL  r^.^jf.'. ._?./..... 

SLOGAN.  ••  WATCH  US  BEAT  IT" 


Figure  34,  Advance  Sales  Statement  for  Buyers 


102 


DEPARTMENT  STORE  STATISTICS 


handling,  they  should  be  printed  on  cards  about  the  size  of 
the  ordinary  business  card,  and  each  evening  when  the  buyer 
makes  up  his  report  of  the  department's  sales  for  the  day,  he 
should  enter  the  amount  this  year  above  that  of  last,  then  at 


BUYER'S  DAILY  SALES  REPORT 

DEPTT       ^V                    OcJ~.:iS        101/ 

SALES  NO. 

AMOUNT 

RETURNS 

NET 
SALES 

St.  c  1 

:2» 

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1 

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s^S-L 

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S 

^s 

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LL 

NET  SALES  LAST  YEAR 
1                                  Increase  —  Decrease 

S.  o  o 

^1 

>B  1 

1^ 

1^^^    /S'->-«--Cc>->iy^     Buyer 

Figure  3S,  Buyers  Daily  Sales  Report 


WEEKLY  REPORTS  103 

the  end  of  the  week  he  can  make  a  comparison  of  the  week's 
results  and  compare  same  with  the  report  which  is  issued  by 
the  statistical  department  and  may  demand  an  explanation  of 
any  difference  between  the  two  amounts. 

Buyers'  Daily  Sales  Reports 

It  will  be  thoroughly  appreciated  that  Sales  Accounting 
to  be  efficient  must  present  the  results  to  the  management  suffi- 
ciently prompt  to  enable  those  in  charge  to  use  the  facts  while 
they  will  do  the  most  good  and  before  they  become  ancient 
history. 

To  this  end,  the  buyer  of  each  department  should  be  re- 
quired to  prepare  a  sales  report  at  the  close  of  each  day  from 
the  footing  of  the  clerks'  indexes,  as  shown  by  Figure  35. 
This  is  made  in  duplicate,  one  copy  being  retained  by  the 
buyer  while  the  other  is  sent  to  the  office  that  evening  with  the 
indexes. 

Daily  Sales  Comparison   [Advance) 

The  first  thing  the  following  morning,  the  auditing  de- 
partment prepares  from  these  reports,  the  comparative  report 
illustrated  by  Figure  36.  If  these  forms  are  printed  on 
"onion  skin"  paper  and  a  soft  carbon  used,  several  good  copies 
may  be  obtained  with  one  operation  on  the  adding  machine, 
and  a  copy  should  be  given  to  each  of  the  executives,  includ- 
ing the  advertising  manager  and  the  superintendent. 

Absolute  Accuracy  of  these  Reports  not  Essential 

It  is  not  likely  that  the  amounts  on  the  Buyers'  Reports 
will  exactly  correspond  with  the  auditor's  results,  but  for  all 
practical  purposes  serves  the  present  purpose  as  well. 

An  important  value  of  this  report  is  that,  when  the  audi- 
tor's report  is  rendered,  if  there  should  be  a  discrepancy  be- 


SALES  REPORT 

Tloxr^ 

191>^ 

DEPT. 

THIS  YEAR 

LAST  YEAR 

DEPT. 

« 

» 

* 

1 

289.72 

247.82 

2 

448.47 

375.20 

3 

284.10 

280.20 

4 

739.01 

683.53 

5 

990.71 

875.92 

6 

617.76 

727.21 

7 

100.58 

64.88 

8 

1,440.93 

1,634.22 

9 

203.73 

125.47 

10 

215.35 

195.09 

11 

277.22 

208.61 

12 

264.85 

211.43 

13 

23.07 

37.75 

14 

118.96*" 

201.87 

15 

86.01 

60.16 

16 

80.68 

56.03 

17 

150.30 

82.58 

18 

1.75 

19 

77.61 

75.94 

20 

162.70 

116.25 

21 

397.44 

246.23 

22 

116.82 

116.09 

23 

109.24 

90.00 

24 

270.18 

268.53 

25 

75.94 

82.43 

26 

63.62 

28.72 

27 

45.35 

27.91 

28 

451.58 

487.36 

29 

558.67 

316.00 

30 

44.20 

22.83 

31 

84.29 

77.70 

32 

87.17 

38.73 

33 

84.70 

66.74 

34 

1,038.73 

848.36 

35 

241.50 

135.30 

36 

135.17 

148.03 

37 

140.56 

46.83 

38 

101.28 

80.24 

39 

26.88 

25.82 

40 

27.12 

41 

14.12 
10,569.11* 

9,414.01*     . 

/  /*.9t#- 

/oyii"»,  /  '^ 

Figure  36,  Daily  Sales  Comparison — All  Departments 


SALES   COMPARISON                          w«k  ending  ^.^  m^ 

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FOR   THK   REASON                                                                |    | 

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WEEKLY  REPORTS  105 

tween  the  auditor's  and  the  buyer's  amounts,  it  is  clear  that 
somewhere  a  mistake  has  been  made,  and  the  difference  should 
be  immediately  investigated  and  explained  by  the  auditor. 
If  this  is  conscientiously  followed  out,  it  will  prevent  credit- 
ing a  wrong  department  through  carelessness  in  sorting  the 
checks,  and  will  go  a  long  way  toward  preventing  collusions 
between  salespeople  and  cashier,  or  between  cashiers  and 
audtiors. 

The  Weekly  Sales   Comparison 

At  the  close  of  each  week,  the  auditing  department  should 
prepare  a  comparative  report  as  illustrated  by  Figure  37. 
This  report,  it  will  be  seen,  is  divided  into  three  sections,— 
the  first  for  the  week,  the  second  for  the  month,  and  the  third 
for  the  season.  This  report  shows  a  comparison  of  the  sales 
with  the  sales  of  the  corresponding  period  the  previous  year, 
and  a  comparison  of  the  percent  of  increase,  or  decrease,  with 
the  percent  of  expected  increase  for  the  season.  The  Slide 
Rule  is  used  for  calculating  these  percentages,  the  basis  for 
which  is  last  year's  sales. 

The  amount  of  reductions  is  also  entered  on  this  report, 
and  a  comparison  made,  similar  to  the  comparison  of  sales. 

Weekly  Purchase  Report 

As  soon  as  possible  after  the  close  of  the  week,  a  report 
of  Purchases,  Figure  38,  should  be  prepared. 

Calculations  Should  he  Based  on  Last  Year's  Business 

In  spite  of  a  promising  outlook,  it  is  good  policy  to  be 
conservative  in  buying,  and  to  this  end  it  will  be  better  to  use 
as  the  basis  for  a  Purchase  Allotment,  the  purchases,  at  COST, 


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Figure  38,   Weekly   Purchase  Report 


WEEKLY  REPORTS  107 

possible  on  the  basis  of  "last  year's  sales"  rather  than  on  the 
basis  of  "expected  sales." 

How  the  Calculations  are  Made 


The  amounts  entered  in  the  first  column  of  this  report 
will  be  the  same  on  every  report  issued  during  a  season.  The 
calculations  of  these  amounts  are  made  by  deducting  the 
total  expected  sales  increase  for  each  department,  shown  by 
the  Preliminary  Plan,  Figure  29,  from  the  total  Retail  Pur- 
chases alloted  on  same;  then  converting  this  into  the  cost 
equivalent  by  deducting  the  percent  of  Initial  Mark-Up 
Required. 

For  Department  No.  1,  illustrated  by  Figure  29,  the 
calculation  is  made  in  the  following  manner: 

Purchase  Plan   (Retail) $21,800.00 

Sales  Plan  $30,000.00 

Sales  Last  Year 27,763.00 

Sales  Increase   2,237.00 


Retail  Purchases,  Basis  Last  Yr.  Sales       $19,563.00 
Less  Initial  Mark-Up  Required— 35%  6,647.05 


Purchase  Allotment— COST   $12,915.95 

Change  in  Allotments  Due  to  Increase  or  Decrease  in  Sales 

The  comparative  report  illustrated  by  Figure  37  shows 
the  percent  of  increase  or  decrease  in  sales  from  the  preced- 
ing year.  The  Purchase  Allotment  should  be  correspond- 
ingly increased  or  decreased;  if  the  sales  have  increased  10%, 
the  Purchase  Allotment  should  be  increased   10%.     There- 


108  DEPARTMENT  STORE  STATISTICS 

fore,  enter  in  the  second  column  on  the  Weekly  Purchase  Re- 
port, Figure  38,  a  percentage  of  the  original  allotment  equal  to 
the  percent  of  increase  or  decrease  in  sales,  this  year  over  last. 
Increases  should  be  entered  in  black,  and  decreases  in  red,  so 
as  not  to  become  confused  one  with  the  other. 

Season's   Corrected  Allotment 


The  increases  are  then  added  to,  and  the  decreases  de- 
ducted from  the  original  allotments  to  arrive  at  the  total 
amount  possible  to  buy  for  the  period.  These  amounts  are 
entered  in  the  third  column. 

Purchases  Made 


Under  this  head,  there  are  two  things  to  be  considered. 
They  are : 

1.  Goods  Received. 

2.  Unfilled  Orders  (For  Current  Season's  Delivery). 

Goods  Received 


The  amount  of  goods  received  is  represented  by  the  total 
amount  of  invoices,  at  cost,  passed  since  the  beginning  of  the 
period.  These  amounts  are  obtained  by  deducting  the 
amount  of  the  inventory  at  the  beginning  of  the  period  from 
the  last  cumulative  total  in  the  Stock  Ledger,  Figure  25,  after 
the  week's  purchases  have  been  posted  and  balanced. 

Unfilled  Orders 

The  amount  of  outstanding  orders  for  the  current  sea- 
son's, or  period's,  delivery  is  obtained  from  the  purchase  order 
record.  This  record  is  explained  in  detail  in  a  later  chapter. 
The  record  should  show  a  classification  of  the  orders  placed 


WEEKLY  REPORTS  109 

by  each  department  according  to  month  of  delivery,  but  it  is 
the  total  amount  of  all  orders  placed  for  delivery  BEFORE  THE 
END  OF  THE  PRESENT  SEASON  which  must  be  entered  in  the 
"Unfilled  Orders"  column  on  Figure  38.  The  total  amount 
of  "Goods  Received"  and  "Unfilled  Orders"  for  each  depart- 
ment constitutes  "Total  Purchases  Made,"  and  these  amounts 
are  now  entered  in  the  respective  column. 

Balance  to  Buy 

Having  now  determined  the  total  amount  possible  to  buy 
and  the  total  amount  already  purchased,  the  difference  be- 
tween these  two  represents  the  remaining  purchasing  power 
of  the  department,  or  the  amount  overbought.  "Balance  to 
Buy"  should  be  entered  in  black  and  "Overbought"  in  red. 

Average  Weekly  Allowance 

In  some  stores,  the  "Balance  to  Buy"  is  further  dealt 
with  by  converting  it  into  an  average  weekly  allowance.  This 
is  done  by  dividing  the  balance  by  the  number  of  weeks  re- 
maining in  the  period,  and  for  performing  these  calculations, 
the  Slide  Rule  again  finds  a  ready  use. 

Set  the  Runner  on  Scale  D  to  coincide  with  the  number 
of  weeks  remaining  in  the  period,  then  by  moving  the  Slide, 
for  each  department,  so  that  the  "Balance  to  Buy"  coincides 
with  the  Runner,  the  weekly  average  will  be  found  on  Scale 
C,  above  either  the  Right  or  Left  Index  of  Scale  D. 

Comparison   of  Turnover 

Another  line  of  information  for  the  General  Manager, 
and  one  which  is  often  given  a  small  place  in  the  Accounting 
System,  is  that  concerning  turnover.  Quick  Turnover  is  the 
key  to  moneymaking.     Volume  of  sales  when  in  proportion 


110 


DEPARTMENT  STORE  STATISTICS 


to  Stock  is  the  point  to  look  for.  $50,000.00  sales  is  poor  busi- 
ness if  it  takes  $30,000.00  stock  to  do  it.  Quick  Turnover  will 
do  more  toward  increasing  the  rate  percent  of  gross  profit 
finally  realized  than  a  high  percent  of  Initial  Mark-Up  alone 
can  ever  do. 


WEEKLY  STOCK  STATEMENT 
Week   Ended   Tune   17.   1911 


STOCK    ON    HAND 
THIS    YEAR  LAST    YEAR 


INCREASE    (RED) 
DECREASE    (bLACk) 


DAYS   TO   SELL 
THIS   VR.        LAST   Yl 


1 

2 
3 

4 
5 
6 

7 
8 
9 

10 


8,490.92 
6,442.98 
6,618.23 

13,791.86 
6,866.99 
7,970.22 

3,515.19 

11,040.23 

7.176.28 

6.608.75 


7,650.21 
9,898.57 
7.248.30 

12,096.94 

5.304.10 

11.544.42 

3.166.41 

10.137.15 

6.874.59 

7,735.77 


840.71 
3,455.59 
630.07 

1,694.92 
1,562.89 
3.574.20 

348.78 
903.08 
301.69 

.127.02 


132 

98 

102 

65 
58 
57 

71 
21 

89 


173 
214 
131 

61 

43/2 
73 

90 
22 
86 


Total 

242.759.92             229.236.16 

13.523.76 

89          91 

Figure  JQ,  Weekly  Comparison  of  Turnover 

Weekly   Turnover  Report 

The  Retail  Stock  balances  should  be  tested  at  least  once 
each  week  to  ascertain  the  rate  of  turnover.  To  make  these 
calculations  in  the  ordinary  arithmetical  way, 


Errata:     $301.69  is  increase. 


WEEKLY  REPORTS  111 

1.  Divide  the  sales  for  the  period  by  the  number  of  business 
days  since  the  beginning  of  the  period,  to  find  the  average 
day's  sales. 

2.  Divide  the  present  stock  balances  by  the  average  day's 
sales  to  find  the  number  of  days  required  to  turn  the 
present  stock  once,  provided  the  same  daily  average  is 
maintained. 

EXAMPLE 

$3,360.72  Sales  in  76  days. 
Present  Stock,  $7,650.21. 

SOLUTION 

$3,360.72 -^  76  =  $44.22,  Average  Day's  Sales. 
$7,650.21  -^  $44.22  =  173  Days  to  Sell. 

JVith   the  Slide  Rule 


With  the  Slide  Rule  these  calculations  are  greatly  sim- 
plified.    The  operation  resolves  itself  into  the  proportion, 

Sales  for  ]        f  Retail  Stock  1         f  Days  since  1         f  Days  to 
Period      \  :  \  Balance  {'-''{  beginning     \   :   -i  Sell 

J        [  J         I  of  period     J         ' 


The  formula  for  setting  the  Slide  Rule  is: 

FORMULA  No.  23 


c 

Set  Sales  for  Period 

Under  Days  in  Period 

D 

Over  Retail  Stock  Balance 

Find  Days  to  Sell 

Weekly   Turnover  Report  Illustrated 

Figure  39  illustrates  a  convenient  form  for  making  a 
weekly  comparison  of  stock  balances,  this  year  with  last,  show- 


112  DEPARTMENT  STORE  STATISTICS 

ing  increases  and  decreases  in  amounts  carried,  together  with 
the  comparative  number  of  days  to  turn. 

In  making  the  calculations  of  the  "days  to  sell,"  this 
report  is  laid  beside  the  sales  report  illustrated  by  Figure  37, 
which  shows  the  total  sales  for  the  period,  both  "this"  and 
"last"  year.  Set  the  sales  for  the  period  on  Scale  C,  over  the 
present  stock  balance  on  Scale  D,  and  find  under  the  number 
of  business  days  since  the  beginning  of  the  period  to  date  on 
Scale  C,  the  number  of  days  required  to  sell,  or  turn  the 
present  stock  on  Scale  D, — provided  the  same  daily  average 
can  be  maintained. 

Buyers*  Reports 

The  usefulness  of  these  reports  would  not  be  complete 
unless  the  buyers  were  given  the  same  information. 

Figure  40  is  a  form  for  the  buyers'  weekly  reports.  It 
will  be  seen  that  there  are  three  sections:  the  upper  section 
contains  a  statement  of  Purchases,  Sales,  and  Reductions  for 
the  week ;  the  middle  section  contains  a  statement  of  the  con- 
dition of  Stock,  Unfilled  Orders,  and  Balance  to  Buy;  and 
the  lower  part  contains  a  statement  of  the  Purchases,  Sales, 
Reductions,  etc.,  cumulative,  from  the  beginning  of  the  period 
to  date,  including  the  amounts  entered  in  the  upper  section  of 
the  report. 

The  lower  part  of  this  report  is  printed  in  red  and  the 
entries  are  made  in  red,  while  the  other  two  parts  are  made  in 
black. 

General  Manager  Should  Review   These  Reports 

These  reports  should  be  given  to  the  General  Manager  to 
review  before  being  given  to  the  buyers.     If  there  is  anything 


o 


STATEMENT 

WEEK  ENDED  t£«>^sa  1913 


DEPT...::;?.?. 


191?r 

191^ 

Purchases 

(Retail) 

..^,.1.^8.... 

.<?..?. 

^^tlrJ.P. 

.*»..o. 

Sales 

( ". .).... 

^ff 

op 

....U.^..pJ> 

M.. 

Reductions 

(      "     ) 

'-' 

— 

STOCK 


Balance  on  Hand  (Retail) 
Days  to  Sell 

r^\    Unfilled  Orders  (Cost) 

Possible  to  Buy  (Cost) 


Svf.f.. 


2A. 


43 


S-ZfJ 

3.,.^..s^.9 


if 


SJ.. 

3ZL 


LAST  INVENTORY  TO   DATE 


Purchases  (  Retail  j| 

Sales  (     ••      ) 

Reductions         (      **      ) 

Average  Marked 
Inventory  and  Purchases 


Expected  to  Realize 


LL.S-13- 


REMARKS 


o 


Figure  40,  Weekly  Merchandise  Report  for  Buyers 


114  DEPARTMENT  STORE  STATISTICS 

of  importance  to  which  he  desires  to  call  the  buyer's  attention, 
a  notation  may  be  made  under  "remarks"  before  the  report  is 
handed  to  the  buyer. 

Buyers  Should  be  Provided  with  Suitable  Loose  Leaf  Binders 

in  Which  to  File  these  Reports 

These  reports  should  be  made  to  fit  a  loose  leaf  binder  in 
which  they  may  be  filed  by  the  buyers  for  their  future  refer- 
ence. If  a  bu3^er  has  charge  of  more  than  one  department, 
his  binder  may  be  subdivided  so  that  a  separate  section  may  be 
set  apart  for  each  department. 


CHAPTER  X 

DISTRIBUTING  EXPENSES 

IN  carrying  out  the  accounting  scheme,  insufficient  thought 
is  often  given  to  the  distribution  of  the  various  items  of 
overhead  expense  to  the  different  departments  on  a  fair 
and  equitable  basis.  On  this  subject  there  is  also  a  great 
diversity  of  opinion.  Some  merchants  view  it  as  being 
merely  an  "embellishment"  to  what  they  would  consider  an 
already  complete  system;  some  think  that  the  final  results  to 
the  FIRM  are  in  no  way  affected  by  making  a  careful  analysis 
of  the  expense  accounts  so  that  one  department  will  not  be 
overburdened  while  another  gets  through  with  a  dispropor- 
tionately light  expense  burden. 

With  the  store  as  a  whole,  so  with  the  department  as  a 
unit,  expense  determines  the  requirements,  and  if  the  amount 
of  expense  be  not  logically  determined,  the  conclusions  as  to 
the  success  or  failure  of  the  departments,  in  so  far  as  they  are 
based  on  the  records  kept,  are  not  likely  to  be  of  much  real 
value. 

The  practice  of  distributing  the  overhead  expenses  in 
bulk,  prorata  to  sales,  has  not  only  grown  obsolete,  but  has 
been  found  hopelessly  inadequate  to  the  demands  of  present 
day  business  methods.  In  Chapter  VIII  was  shown  the  im- 
portant part  that  expense  holds  with  the  volume  of  sales  to  be 
expected  from  a  department.  If  the  amount  of  overhead 
expense  charged  to  a  department  was  determined  wholly  on 
the  basis  of  sales,  poor  business  would  in  the  end  justify  itself. 


116  DEPARTMENT  STORE  STATISTICS 

The  Expense  Accounts  which  admit  of  a  distribution 
direct  to  the  department  which  receives  the  benefit,  are: 

A.  Salary, 

B.  Freight, 

C.  Advertising, 

D.  Rent, 

E.  Window  Display, 

F.  Insurance  and  Taxes, 

G.  Department  Expense. 

To  prepare  the  total  amount  of  expense  for  each  of  the 
departments  each  month,  a  sheet,  such  as  is  illustrated  by 
Figure  41,  Monthly  Tabulation  of  Expenses,  may  be  used. 

The  expense  accounts  given  above  are  taken,  one  by  one, 
prorated,  and  entered  on  this  form.  Then  all  other  expense 
accounts  are  distributed  in  bulk  in  the  manner  described  in 
Section  H,  of  this  chapter. 

When  the  distribution  and  recapitulation  of  all  is  com- 
plete, the  sheet  is  crossfooted,  the  total  for  each  department 
being  entered  in  the  extreme  right  hand  column,  the  total  of 
which  must  agree  with  the  total  of  all  Expense  Accounts  on 
the  General  Trading  Account  for  the  month. 

A.     SALARY 

The  method  of  ascertaining  the  amount  of  salary  earned 
by  the  employees  in  each  department  and  making  this  the  basis 
at  the  end  of  the  month  rather  than  the  salary  paid  has  been 
fully  described  and  illustrated  in  Chapter  V.  (See  Figure 
19).  The  results  of  this  distribution  are  posted  to  the 
Monthly  Tabulation  of  Expenses,  then  with  the  Slide  Rule, 
the  percent  for  each  department  is  calculated  in  the  manner 
illustrated  by  Formula  6. 


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Figure  41,  Monthly  Tabulation  of  Expenses 


DEPARTMENT  STORE  STATISTICS 


B.      FREIGHT  AND  EXPRESS* 

Freight  charges  should  be  distributed  direct  from  copies 
of  the  original  Freight  Bills. 


ERIE  RAILROAD  CO..  on..  '-  tu^  -  '••<«•  ie»r-J^ 


US  xuT  oooaa  fsrs 


eirie:  railroad  co. 

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0tQfB Tmmftimm.  ft 


:__iifjji_ 


Figure  42,  Freight  Bill  and  Checked  Delivery  Receipt 

When  a  Freight  shipment  is  received,  the  receiving  clerk 
should  obtain  from  the  driver,  the  copy  of  the  original  freight 
bill  marked  "delivery  receipt"  shown  in  Figure  42.  The 
buyer  of  the  department  to  which  the  goods  belong  should  be 
required  to  mark  on  this  copy, 

1.  The  Name  of  the  Consignor, 

2.  The  Department  to  which  the  goods  belong,  and 

3.  Sign  with  his  initials. 

In  this  way  there  will  be  little  danger  of  making  the 
charge  against  the  wrong  department. 

These  copies  are  then  held  on  file  until  the  "freight  bills" 
are  received,  when  they  are  checked  off  by  the  receiving  clerk, 
the  "freight  bills"  being  sent  to  the  cashier  to  be  paid  and 
charged  to  the  general  Freight  Account,  and  the  "delivery 

*NoTE — While  the  item  of  Freight  is  not  an  Expense  but  a  part  of  the  Cost  of  the 
Merchandise,  many  merchants  classify  it  as  an  expense,  and  the  writer  con- 
siders it  best  to  so  classify  it  here,  showing  in  a  subsequent  chapter,  how  the 
account  may  be  more  properly  handled,  leaving  the  choice  to  the  individual 
merchant 


DISTRIBUTION  OF  EXPENSES 


119 


receipts"  sent  to  the  statistical  department  to  be  distributed  to 
departments.  At  the  end  of  the  month,  the  total  of  the  dis- 
tribution must  agree  with  the  total  amount  charged  to  the 
general  Freight  Account  during  the  month. 

Express  charges  may  be  handled  in  a  similar  way,  using 
the  regular  express  receipts  to  make  the  distribution,  after 
the  cashier  has  used  them  in  making  settlement  with  the  Ex- 
press Companies,  although  special  form  designed  after  the 
illustration  shown  as  Figure  43  may  be  used,  if  desired.  The 
only  advantage  gained  by  using  a  form  of  this  kind  is  that  the 


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charges  on  all  shipments  received  from  one  Express  Company 
each  day,  are  concisely  recorded  on  one  sheet  and  the  record 
of  amounts  paid  to  all  Express  Companies  are  on  sheets  of 
uniform  size  for  filing.     With  the  use  of  a  form  of  this  kind, 


20 


DEPARTMENT  STORE  STATISTICS 


the  Express  Companies  are  not  usually  required  to  give 
receipts  on  their  own  forms,  the  collector's  signature  on  this 
form  being  sufficient. 


ADVERTISING 


DISTRIBUTION    OF    ADVERTISING 

^-'^-^('yx.^.^xyi^,       191  "S 


Figure  44,  Distribution   of  Advertising 

The  distribution  of  newspaper  advertising  should  be  on 
the  basis  of  newspaper  space  used  by  each  department.  The 
advertising  manager  should  measure  the  space  daily  and  make 
a  recapitulation  of  same  so  that  he  can  tell  at  the  close  of  the 
month,  the  space  used  by  each  department  and  the  space  given 
to  headings  and  general  advertising. 

At  the  close  of  the  month,  the  advertising  manager  should 
enter  on  a  form  designed  after  the  illustration,  Figure  44,  the 
total  space  used  by  each  department,  showing  the  amount  of 
space  used  for  headings  at  the  foot  of  the  column  "Headings 
and  General."     On  the  back  of  this  sheet  he  should  enter  the 


DISTRIBUTION  OF  EXPENSES  121 

names  of  the  papers  and  the  amount  of  space  used  in  each,  to- 
gether with  the  amount  of  the  month's  bill  included  in  the  dis- 
tribution. In  this  way,  the  main  office  has  a  means  of  know- 
ing that  all  bills  have  been  properly  charged  up  on  the  general 
books  of  account. 

The  basis  on  which  the  headings  shall  be  charged  to  the 
departments  depends  in  a  measure  on  individual  opinion. 
Some  prorate  this  space  among  the  departments  which  have 
used  newspaper  advertising,  according  to  the  space  which 
each  has  used.  In  this  way,  departments  w^hich  have  done 
no  newspaper  advertising  during  the  month  will  not  be 
charged,  with  any  of  this  heading  space. 

Others  contend  that  while  some  of  the  departments  have 
had  no  newspaper  advertising,  the  firm's  name  and  the  general 
announcements  contained  in  the  advertisements  have  bene- 
fitted all  departments,  whether  the  wares  of  all  have  been 
mentioned  in  the  advertisements  or  not.  To  carry  out  this 
idea  it  is  customary  to  make  the  distribution  on  the  basis  of 
sales. 

The  distribution  illustrated  is  made  after  the  first  method 
mentioned,  and  the  formula  for  making  the  distribution  of 
the  heading  space  is, 

FORMULA  No.  24 


C 


D 


Set  Total  Space  Used 


Over  Heading  Space 


Under  Dept.  Space  Used 


Find  Share  of  Heading  Space 


If  the  distribution  of  the  "heading  space"  is  to  be  made 
on  the  basis  of  sales  so  that  all  departments  will  be  charged 
with  a  proportionate  part  of  the  amount,  use  the  following 
formula: 


FORMULA  No.  25 


c 

Set  Total  Sales 

Under  Dept.  Sales 

D 

Over  Heading  Space 

Find  Share  of  Heading  Space 

122  DEPARTMENT  STORE  STATISTICS 

The  advertising  manager  having,  as  stated,  entered  the 
names  of  the  various  publications  and  the  amount  of  the 
month's  bill  rendered  by  each,  on  the  back  of  the  distribution 
sheet,  the  total  amount  of  these  newspaper  bills  are  then  dis- 
tributed among  the  departments  prorata  to  the  "total  space" 
charged  to  each.  This  is  done  by  dividing  the  total  amount 
by  the  total  space  to  find  the  unit,  then  multiplying  the  total 
space  for  each  department  by  this  unit  to  find  the  amount  to  be 
charged  to  each. 

With  the  Slide  Rule  the  calculations  are  made  by  using 
the  following  formula: 

FORMULA  No.  26 


c 

Set  Total  Space 

Under  Dept  Space 

D 

Over — Total  Amount 

Find  Dept.  Share  of  Adv. 

Newspaper  Adv, 

One  setting  of  the  Slide  is  all  that  is  necessary,— setting 
the  total  space  to  coincide  with  the  total  amount, — the  results 
for  each  department  then  being  found  on  Scale  D  coinciding 
with  the  "space"  on  Scale  C. 

The  difiference  between  the  newspaper  advertising  and 
the  total  amount  charged  to  advertising  account  on  the  general 
books  is  made  up  of  salaries,  and  other  miscellaneous  adver- 
tising expense;  enter  this  amount  at  the  foot  of  the  column 
headed  "General  Advertising,"  Figure  44.  This  must  then 
be  distributed.  The  distribution  of  this  amount  shown  in  the 
illustration  has  been  made  on  the  basis  of  Sales,  but  this  may 
be  changed  to  meet  with  individual  opinion.  To  make  these 
calculations,  divide  the  total  general  advertising  expense  by 
the  total  sales,  then  multiply  the  sales  of  each  department  by 
this  unit  to  find  the  amount  to  be  charged  to  each.  With  the 
Slide  Rule,  use  the  following  formula: 

FORMULA  No.  27 


C 


Set  Total  Sales  I  Under  Dept.  Sales 


D 


Over  Total  Gen.  Adv.  Find  Dept.  Share  of  Gen.  Adv. 


DISTRIBUTION  OF  EXPENSES  123 

Enter  the  amounts  obtained  for  each  department  on  the 
distribution  sheet,  Figure  44,  in  the  column  headed  "General 
Advertising."  Prove  these  amounts  by  making  the  total 
amount  of  same  agree  with  the  amount  of  General  Advertising 
previously  entered  at  the  foot  of  this  column;  then  crossfoot 
the  amount  of  newspaper  and  general  advertising  for  each 
department,  placing  the  full  amount  in  the  column  headed 
"total" ;  the  total  amount  of  this  column  must  agree  with  the 
total  amount  expended  for  advertising  during  the  month  as 
shown  by  the  general  ledger  account. 

D.      RENT 

In  the  distribution  of  rent,  there  are  two  factors  which 
make  it  a  somewhat  complex  problem.     These  are : 

1.  A  square  foot  on  one  floor  does  not  have  the 
same  value  as  a  square  foot  on  all  other  floors. 

2.  All  locations  on  the  same  floor  do  not  have  the 
same  value. 

The  first  step  in  the  distribution  of  Rent  is  to  set  a  value 
on  each  floor.  Then  on  a  sheet  of  sectional  paper,  draw  a 
sketch  of  each  floor,  as  shown  by  Figure  45 ;  in  this  way  it  is 
easy  to  determine  the  number  of  square  feet  occupied  by  each 
department  on  that  floor,  no  matter  how  irregular  in  shape 
that  department  may  be. 

Assign  "rank  1"  to  what  is  considered  the  poorest  location 
on  the  floor  and  rank  all  other  departments  on  that  floor  on  the 
same  basis,  as  shown  in  Figure  46,  page  125. 

The  rental  charge,  after  being  once  calculated,  remains 
the  same  from  month  to  month,  except  as  changes  may  be 
made  from  time  to  time  either  to  accommodate  a  department 
during  a  special  season,  or  permanently.  The  superintendent 
should  promptly  notify  the  statistician  when  such  changes  are 
made. 


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DISTRIBUTION  OF  EXPENSES 


125 


D1STR.IBUTION   OF  RENT 


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E.      WINDOW  DISPLAY 

This  is  sometimes  included  in  the  distribution  of  Rent 
each  month,  but  it  is  very  desirable  that  it  be  kept  separate. 

Assuming  that  the  firm  is  in  a  rented  building,  the  sum 
of  rent  and  window  display  will  make  up  the  entire  amount 
of  the  total  rent  paid  each  month.  If  the  firm  owns  the  build- 
ing, a  journal  entry  should  be  made  each  month,  charging 


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DISTRIBUTION  OF  EXPENSES 


127 


Window  Display  (Expense)  Account  and  crediting  Rent 
Account.  This  latter  is  one  of  the  firm's  own  Profit  and  Loss 
Accounts,  in  which  the  departments  do  not  participate. 

A  value  should   be   placed   on   each  window,   and   the 
window  trimmer  should  be  required  to  keep  a  record  from 


INSURANCE    AND    TAXES 


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128  DEPARTMENT  STORE  STATISTICS 

which  to  determine  at  the  end  of  each  month,  the  amount  to  be 
charged  to  each  department  for  window  display.  Figure  47 
is  suggestive  of  the  way  in  which  such  a  record  may  be  kept. 

F.      INSURANCE  AND  TAXES 

The  basis  for  the  distribution  of  this  charge  is  stock. 
Insurance  on  Merchandise  Stock  and  insurance  on  Fixtures 
may  be  dealt  with  separately,  and  should  be,  if  the  records  are 
so  arranged  that  the  value  of  the  fixtures  in  each  department 
may  be  readily  determined. 

To  make  the  distribution  of  Insurance  and  Taxes,  enter 
on  a  sheet  as  illustrated  by  Figure  48,  the  value  of  the  stock 
carried  by  each  department  and  the  total  amount  of  "Expired 
Insurance  and  Taxes,"  for  the  month. 

In  the  ordinary  arithmetical  way  this  distribution  is  made 
by  first  dividing  the  total  amount  of  "Expired  Insurance  and 
Taxes,"  entered  on  the  distribution,  by  the  total  amount  of 
Stock,  then  multiplying  the  amount  of  stock  in  each  depart- 
ment by  this  ratio  to  find  the  amount  to  be  charged  to  that 
department. 

With  the  Slide  Rule,  the  following  formula  is  used  and  it 
will  be  seen  that  this  greatly  reduces  the  labor  necessary  to 
make  the  distribution: 

FORMULA  No.  28 


c 

Set  Total  Stock 

Under  Dept  Stock 

D 

Over  Total  Ins.  and  Tax 

Find  Dept.  Ins.  and  Tax 

G.      DEPARTMENT  EXPENSE 

This  is  made  up  of  charges  made  direct  to  departments 
during  the  month  through  the  books  of  original  entry,  and  the 
method  of  arriving  at  the  total  amount  for  each  department 
is  determined  wholly  by  the  arrangement  of  the  general  book- 
keeping system. 


DISTRIBUTION  OF  EXPENSES 


129 


H.      GENERAL  EXPENSE 

All  expense  accounts  which  have  not  been  included  in 
the  distributions  described  are  now  taken  in  bulk  and  dis- 
tributed. These  include  such  accounts  as  Office,  Delivery, 
Administration,  etc. 

Office  Expense  is  affected  principally  by  Purchases  and 
Sales;  Administration  Expense,  by  Stock,  Purchases,  and 
Sales;  Light,  Heat  and  Cleaning,  by  Space  and  Stock.  By 
a  careful  analysis  of  the  factors  which  enter  into  a  fair  distri- 
bution of  the  "overhead,"  the  following  elements  seem  to 
form  the  best  basis : 

1.  Space,  or  Rent. 

2.  Stock. 

3.  Purchases. 

4.  Sales. 

Prepare  a  sheet  as  shown  by  Figure  49. 


GENERA'     P.  YPPMSK                 J^ry...^    Y)\d 

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SPACE 

STOCK 

PURCHASES 

SALES 

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Figure  49,  Distribution  of  General  Expense 


30  DEPARTMENT  STORE  STATISTICS 

1.  Find  what  percent  of  the  total  rent  is  charged  to 
each  department;  enter  this  percent  in  the  first 
column.  For  performing  this  calculation,  di- 
vide the  rent  for  each  department  by  the  total 
rent.  With  the  Slide  Rule  use  the  following 
Formula: 


D 


Set  Total  Rent 


FORMULA  No.  29 


Under  1 


Find  % 


Over  DcpL  Rent 

The  total  percent  for  all  departments  must  equal  100%. 
Any  small  differences  must  be  adjusted. 

2.  Find  what  percent  of  the  total  stock  is  carried  by 
each  department,  and  enter  these  percents  in  the 
second  column.  The  method  of  making  these 
calculations  is  similar  to  the  one  just  described. 

3.  Find  what  percent  of  the  total  purchases  was 
made  by  each  department,  and  enter  these  in  the 
third  column. 

4.  Find  what  percent  of  the  total  sales  was  made  by 
each  department  and  enter  these  in  the  fourth 
column. 

Each  of  these  columns  will  now  foot  100%.  Crossfoot 
these  columns  into  column  "  5,"  the  total  of  which  will  then  be 
400%.  Next,  divide  each  of  the  amounts  in  column  ''  5  "  by 
four  (4)  to  get  the  average  for  each  department.  Then  mul- 
tiply the  total  "overhead"  expense  by  the  average  percent  just 
ascertained  to  find  the  amount  to  be  charged  to  each  depart- 
ment. 


CHAPTER  XI 


PURCHASE  ORDER  RECORD 


P 


URCHASE  Orders  should  be  in  triplicate  and  bound  in 
books  of  convenient  size,  containing  either  50  or  100 
orders  each,  numbered  consecutively  in  triplicate. 


An  Order  Should  be  Written  for  All  Goods  Purchased 

No  goods  should  be  purchased,  except  on  this  written 
order,  properly  signed  by  the  general  manager,  or  merchan- 
dise man,  and  the  buyer.  When  goods  are  purchased  by  tele- 
phone or  telegraph,  a  confirming  order  should  be  written  and 
sent  through  in  the  regular  way  so  that  the  purchase  order 
record  will  be  complete.  In  order  to  guard  against  a  duplica- 
tion of  the  order,  all  such  orders  should  be  stamped  plainly 
across  the  face,  "Confirming  Order — DO  NOT  DUPLICATE.'^ 

A  Separate  Book  for  Each  Department 

A  separate  order  book  should  be  used  for  each  depart- 
ment. A  buyer  should  not  be  permitted  to  use  one  order  book 
for  several  departments  if  he  buys  for  more  than  one,  but 
should  be  required  to  use  a  separate  book  for  each.  Neither 
should  he  be  allowed  to  use  one  book  for  "this  season's"  orders 
and  another  for  "next  season's,"  but  should  enter  all  on  the 
same  book.  Much  confusion  will  be  overcome  if  these 
restrictions  are  strictly  enforced. 

How  Copies  of  Orders  are  Handled 

As  soon  as  an  order  has  been  written,  the  original  should 
be  mailed,  and  the  duplicate  sent  to  the  office,  while  the  tri- 


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PURCHASE  ORDERS  133 

plicate  is  retained  by  the  buyer  for  reference.  It  is  customary 
in  many  stores,  and  is  a  highly  satisfactory  plan,  to  have  the 
duplicate  removed  from  the  order  book  by  the  General  Man- 
ager, or  other  official  by  whom  the  orders  are  signed,  at  the 
time  he  signs  them.  When  this  is  not  done,  buyers  sometimes 
withhold  the  duplicate  copies  for  a  length  of  time,  thereby 
destroying  the  intended  value  of  the  Purchase  Order  Record, 
or  making  a  lot  of  unnecessary  work  for  the  office  in  tracing 
these  missing  copies. 

Record  of  Orders  Placed 

A  most  convenient  method  of  handling  the  duplicate 
copies  in  the  office  and  keeping  a  record  of  orders  placed  by 
each  department  is  illustrated  by  Figure  SO.  This  consists  of 
a  straight  cut  folder,  size  9''xll%'',  ruled  as  shown  in  the 
illustration.  A  separate  folder  is  used  for  each  department. 
Daily  as  the  duplicate  copies  are  received  in  the  office,  the 
record  is  made  on  the  folder,  showing  in  the  left  hand  column, 
the  date  the  order  is  placed;  in  the  next  space  is  shown  the 
number  of  the  order  and  above  this  in  small  figures,  the 
amount.  If  several  orders  are  placed  on  the  same  day,  they 
may  be  entered  one  after  the  other  on  the  same  line,  and  if 
necessary  several  lines  may  be  used  for  the  orders  placed  on 
a  single  day. 

Distribution 


1.  A  classification  of  the  orders  placed  for  delivery 
during  each  of  the  six  months  in  the  current 
season,  and  a  column  for  the  total  amount  of  all 
such  orders. 


134  DEPARTMENT  STORE  STATISTICS 

2.  A  column  in  which  to  enter  orders  placed  in  ad- 
vance for  next  season's  delivery,  with  a  small 
space  in  front  of  the  amount  column  in  which  to 
write  the  month  of  delivery. 

3.  A  column  in  which  to  enter  the  total  amount  of 
all  orders  placed  by  a  department,  for  present 
season  and  future  delivery. 

4.  Space  for  Remarks. 

Orders  Should  be  Entered  by  Consecutive  Number 

It  is  important  that  the  orders  be  entered  by  consecutive 
number,  in  this  way  giving  assurance  that  all  are  accounted 
for,  and  all  missing  numbers  should  be  immediately  traced. 
No  excuse  should  be  accepted  from  a  buyer  for  holding  an 
order  from  one  day  to  the  next.  This  explains  the  reason  for 
restricting  the  use  of  an  order  book  to  one  department,  for 
if  one  book  were  used  in  several  departments,  the  orders  could 
not  be  recorded  in  consecutive  order  and  it  would  be  a  very 
difficult  matter  to  audit  the  record  in  order  to  know  that  all 
duplicates  had  been  entered. 

Cancellations 


When  orders  are  cancelled,  the  memorandum  of  same 
may  be  made  on  one  of  the  regular  order  forms,  and  handled 
similar  to  the  placing  of  an  order,  except  that  the  entry  on 
the  folder  for  such  a  transaction  will  be  made  in  red  ink  and 
the  amount  deducted  from  the  total  amount  of  orders  placed 
when  the  folders  are  footed  and  balanced. 


PURCHASE  ORDERS  135 

Advantages 

By  keeping  the  Purchase  Order  Record  in  this  fashion,  it 
is  possible  to  easily  determine  the  amount  of  goods  ordered 
by  any  department, — 

1.  For  delivery  during  each  of  the  several  months 
in  the  current  period  or  season, 

2.  The  total  amount  of  goods  ordered  for  current 
season  delivery, 

3.  The  amount  for  delivery  next  season  (by  months 
if  desired),  and 

4.  The  total  amount  of  all  orders  placed. 

Filing  Duplicates  Before  Orders  are  Filled 

After  the  orders  have  been  recorded,  the  duplicates  are 
placed  inside  the  folder  until  the  invoice  is  received.  Before 
sending  the  invoice  to  the  receiving  room,  it  should  be  checked 
against  the  duplicate  order  on  file;  by  so  doing,  any  goods 
which  might  be  sent  in  unauthorized,  will  be  caught  up  be- 
fore the  package  is  opened.  When  only  a  partial  shipment  is 
made  on  an  order,  the  amount  received  should  be  deducted 
from  the  amount  of  the  order  at  the  time  the  invoice  is 
checked  against  it,  and  the  balance  carried  as  "unfilled." 

Arrangement  in  Folders 

The  orders  for  the  current  month's  delivery,  may  be  left 
loose,  numerically  arranged,  in  the  front  of  the  folder,  and 
those  for  delivery  later,  may  be  arranged  according  to  month 


136  DEPARTMENT  STORE  STATISTICS 

of  delivery,  fastened  together  with  a  paper  clip,  and  placed 
back  of  the  current  month's  orders,  in  the  same  folder. 

Weekly  Report 

When  the  Weekly  Purchase  Report,  Figure  38,  is  pre- 
pared, the  amount  of  unfilled  orders  is  ascertained  in  the  fol- 
lowing manner: 

1.  Foot  and  balance  all  the  folders. 

2.  On  an  adding  machine,  take  a  total  of  the  cur- 
rent month's  unfilled  orders,  in  the  front  of  the 
folder. 

3.  To  this,  from  the  footings  of  the  columns  on  the 
face  of  the  folder,  add  the  totals  of  the  orders 
placed  for  delivery  during  each  of  the  succeed- 
ing months  in  the  current  period. 

This  gives  the  amount  of  unfilled  orders,  while  the  folder 
shows  the  total  amount  of  orders  placed  \  the  difference  be- 
tween these  two  amounts  should  represent  approximately  the 
amount  of  goods  received. 


When  Date  of  Shipment  is  Changed 

It  hardly  need  be  said  that  no  goods  should  be  allowed  to 
come  in  before  the  date  specified  on  the  order.  When  the 
date  of  shipment  is  changed  and  goods  are  allowed  to  come  in 
ahead  of  the  date  originally  specified,  a  transfer  entry  should 
be  made  on  the  folder,  transferring  the  amount  from  one 
month  to  another,  making  proper  explanation  in  the  space 
regularly  used  for  recording  the  order  number  and  amount. 


PURCHASE  ORDERS 


137 


Figure  51,  File  Containing  Purchase  Order  Folders 


Handling  Folders   Containing   Unfilled  Orders 

The  folders  containing  the  unfilled  orders,  when  not  in 
use  should  be  kept  in  a  vertical  file.  A  convenient  and  inex- 
pensive arrangement  is  illustrated  by  Figure  51.  These  trans- 
fer cases  are  made  in  two  sizes,  containing  4  inches,  and  6 
inches  of  filing  space  respectively.  They  are  made  of  heavy 
cardboard  with  hinged  covers  and  drop  fronts,  so  that  the 
contents  may  be  easily  gotten  at. 


138  DEPARTMENT  STORE  STATISTICS 

Filing  Filled  Orders 

The  filled  orders  for  each  department  may  be  filed  in  a 
vertical  drawer,  arranged  by  departments,  and  the  orders  for 
each  department  should  be  filed  numerically,  so  that  when 
needed  for  reference,  they  may  be  easily  located. 


CHAPTER  XII 

FREIGHT  ACCOUNT 

FREIGHT  is  often  improperly  classified  as  an  expense, 
when  in  fact  it  is  a  part  of  the  laid  down  cost  of  the 
merchandise. 
To  illustrate:  A  merchant  may  have  a  stock  of  mer- 
chandise worth  $200,000.00,  bill  price,  which  if  lost  by  fire  or 
otherwise,  would  cost  him  $202,000.00  to  replace.  In  justice 
to  himself,  therefore,  the  amount  of  freight  which  he  would 
be  required  to  pay  to  duplicate  his  stock,  should  be  inven- 
toried and  carried  as  an  asset,  covered  by  his  insurance  so 
that  in  case  of  fire  he  will  be  amply  protected. 

Freight  Paid — An   Unexpired  Charge 

The  freight  paid  on  unsold  merchandise  is  an  unex- 
pired charge,  which  should  be  written  off,  only  as  fast  as  the 
goods  are  sold. 

Inaugurating  a  Strict  Accounting 

The  best  time,  perhaps,  to  inaugurate  this  method  of 
accounting  for  freight  is  at  the  beginning  of  a  new  period  or 
year.  If  an  analysis  of  the  freight  and  express  charges  as 
described  in  Chapter  X,  has  been  followed,  calculate  for  each 
department,  what  rate  percent  of  the  total  purchases  of  the 
past  year  was  paid  for  transportation.  This  is  done  by  divid- 
ing total  Freight  and  Express  charges  for  each  department  for 
the  year  by  that  department's  total  purchases.  Then  set  aside 
the  same  percentage  of  the  respective  department's  present 
stock  to  carry  as  an  asset. 


140  DEPARTMENT  STORE  STATISTICS 

Each  month  thereafter,  charge  the  current  month's  distri- 
bution of  Freight  and  Express  to  the  Freight  (Asset)  account, 
and  write  off  by  Journal  Entry,  a  percentage  of  the  Cost  of 
Goods  Sold  by  each  department  equal  to  the  rate  percent  of 
purchases  paid  for  transportation  during  the  previous  year, 
charging  same  to  the  Cost  of  Sales  accounts  of  the  respective 
departments  and  crediting  the  Freight  (Asset)  Account. 

Adjusting  the  Account 

At  the  end  of  the  period,  or  year,  the  Freight  Accounts 
should  be  reinventoried,  following  the  same  method  that  was 
used  to  determine  the  amount  of  Unexpired  Freight  and  Ex- 
press in  the  beginning. 

Any  differences  between  this  and  the  book  account  should 
be  adjusted  by  an  additional  journal  entry  between  Freight 
Account  and  Cost  of  Sales. 


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